Tale of the Tape 

Hiya everyone. Another day, another market fall.

Nifty (-1%) and Sensex (-1.2%) got thrashed, inline with the selloff in global markets, over the Fed’s gloomy inflation outlook. Read our top story below for how this will affect Indian markets. Midcaps (-0.3%) and Smallcaps (-0.5%) ended with minor cuts. The advance-decline ratio was in favour of the bears (3:2).

Except Pharma (+1.2%), all other sectors ended in the red. IT (-1.3%) and NBFCs (-1.2%) saw the most selling pressure.

Transrail Lighting IPO kicked off today. Check out our analysis below to help you decide whether to subscribe.

Dr Reddy’s, Stove Kraft and Asian Paints saw big moves today. Look at their charts below to find out why.

Inventurus Knowledge Solutions had a bumper market debut, ending the day at Rs 2,030 p/sh; +53% over its IPO price.

Brokerage reactions. Swiggy (+1%) was in focus after JPMorgan initiated coverage on the stock; the brokerage sees a +27% upside from current levels. Meanwhile, Abbott India gained +3% after JPMorgan hiked its target price to Rs 31,500 p/sh vs Rs 30,000 p/sh earlier.

Block deal reactions. DOMS Industries slumped -4% after FILA sold its 4.57% stake in the firm. Godrej Industries (-2%) was down after 27.7 lakh shares (0.9% equity) changed hands in a block deal; the buyers and sellers were unknown.

SpiceJet soared +9% after it settled a $16 million dispute with an aircraft leasing firm.

IOL Chemicals jumped +9% after it said it would consider a stock split on December 27.

Here are the closing prints:

Economy
Don’t Fight The Fed

The US Federal Reserve kicked global markets including India in the teeth today! ICYMI - the central bank announced a 25 bps rate cut. But what’s got investors upset is that the Fed warned markets to expect fewer rate cuts in 2025. 

The Fed is mostly worried about inflation risks. As chair Jerome Powell bluntly stated: the Fed’s year-end inflation estimate had “kind of fallen apart”. This kind of throws a LOT of assumptions that Indian analysts had out of the window. The rupee quickly reacted, hitting 85  to the US dollar for the first-time ever. FYI - while the decline to 84 from 83 took nearly 14 months, 84 to 85 took just two months. Signs of major volatility indeed.

So what does this all mean for Indian markets? Well:

1) The Fed’s big concern is it doesn’t know how Trump’s tariff & trade war will affect the US economy. Higher tariffs could result in higher inflation AND hurt growth. This is (obviously) bad for the Indian IT sector which was hoping that a US rebound would give it a better FY25. 

2) This also throws up question marks over FII inflows. For the unaware: theoretically, lower US interest rates means FIIs are more likely to invest in emerging markets. Obviously, rates are just one factor and India has other issues like high valuations. But lower-than-expected rate cuts isn’t good news either way for people projecting a FII return in 2025.

3) Finally, there’s the RBI, which was criticised heavily for being behind the curve. If global inflation is stickier than thought, the Indian central bank was right to have been hawkish. Yes, the RBI doesn’t mimic the Fed, but it is influenced heavily by it. All of this will play into whether or not the RBI cuts rates in February. Until now, experts had predicted a cut, but who knows how things will shake out now.

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