Why did Sensex and Nifty Experience a Sharp Decline Ahead of the US Fed Policy Decision?
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Synopsis
The Indian stock markets faced a sharp decline amid widespread selling as investors grew cautious ahead of the US Federal Reserve's policy decision this week. This volatility is influenced by persistent FII selling and external economic factors, leading to a significant downturn in key indices.
Key Takeaways
- Sensex closed at 85,102.69, down 609.68 points.
- Nifty ended at 25,960.55, a decrease of 225.90 points.
- Broad-based selling triggered cautious investor sentiment.
- Persistent FII outflows contributed to market decline.
- Rupee fell to 90.06 against the dollar.
Mumbai, December 8 (NationPress) The Indian equity markets experienced a significant downturn on Monday due to widespread selling, as investors adopted a cautious stance before the upcoming US Federal Reserve policy decision this week. Continuous selling pressure from Foreign Institutional Investors (FIIs) further impacted market sentiment.
The Sensex concluded the day at 85,102.69, reflecting a decline of 609.68 points or 0.71 percent. The 30-share index opened lower at 85,624.84 compared to the previous session's close of 85,624.84. As selling intensified, it reached an intra-day low of 84,875.59.
Nifty ended at 25,960.55, down 225.90 points or 0.86 percent.
"The market faced a widespread downturn, dropping below the 26,000 threshold as investors became cautious ahead of this week’s US Fed policy announcement. Despite strong domestic growth numbers and the Reserve Bank of India's recent rate cut, short-term sentiment is clouded by global monetary policy uncertainties, persistent FII outflows, and currency depreciation," explained Vinod Nair, Head of Research at Geojit Investments Limited.
Market volatility was exacerbated by a rise in Japanese bond yields hitting multi-year highs, raising concerns about a possible unwinding of the yen carry trade, Nair added.
Stocks such as Eternal, Trent, Tata Steel, Bajaj Finance, Bajaj FinServ, PowerGrid, Asian Paint, Tata Motors PV, Titan, NTPC, Kotak Bank, L&T, Bharti Airtel, Mahindra and Mahindra, Axis Bank, Hindustan Unilever, Sun Pharma, Ultratech Cement, ITC, Maruti Suzuki, and Infosys were among the significant losers within the Sensex index, while Tech Mahindra managed to close positively.
Most sectoral indices also closed lower amid the selling trend. Nifty Fin Services dropped 194 points or 0.70 percent, Nifty Bank decreased 538 points or 0.90 percent, Nifty Auto fell 342 points or 1.23 percent, Nifty FMCG was down 662 points or 1.20 percent, and Nifty IT closed 112 points or 0.29 percent lower.
Broader indices mirrored this trend, with Nifty Smallcap 100 declining 456 points or 2.61 percent, Nifty Midcap100 falling 1106 points or 1.83 percent, and Nifty 100 dipping 281 points or 1.05 percent.
The rupee depreciated by 13 paise to 90.06 against the dollar, influenced by ongoing FII selling, a weak equity market, and uncertainties regarding the India-US trade deal.
With the Fed's policy decision and India’s CPI data looming this week, analysts predict continued volatility, with the rupee expected to trade within a weak range of 89.75–90.30.
Point of View
We recognize the fluctuations in the Indian stock markets as a reflection of broader economic trends and investor sentiments. The decline does not merely stem from local factors but is interwoven with global economic uncertainties, emphasizing the need for resilience and strategic planning in investment approaches.
NationPress
09/12/2025
Frequently Asked Questions
What caused the decline in the Indian equity markets?
The decline was primarily driven by widespread selling as investors became cautious ahead of the US Federal Reserve's policy decision, compounded by persistent selling from Foreign Institutional Investors.
How did the Sensex and Nifty perform?
The Sensex fell by 609.68 points or 0.71 percent, closing at 85,102.69, while Nifty dropped by 225.90 points or 0.86 percent, ending at 25,960.55.
What impact do global monetary policies have on Indian markets?
Global monetary policies significantly affect investor sentiment in India, impacting capital flows and market stability.
What should investors watch for this week?
Investors should closely monitor the outcomes of the US Federal Reserve's policy decision and India's CPI data, as these will likely influence market volatility.
How is the rupee performing against the dollar?
The rupee has depreciated by 13 paise to 90.06 against the dollar due to ongoing FII selling and weak equity markets.
