Indian equity benchmarks slip as Fed rate trajectory worries hit IT stocks

Reuters

Indian equity benchmarks slip as Fed rate trajectory worries hit IT stocks

Dec 16, 2024 at 10:28 am GMT

<html xmlns="http://www.w3.org/1999/xhtml"><head><title>INDIA STOCKS-Indian equity benchmarks slip as Fed rate trajectory worries hit IT stocks</title></head><body>

Updates at close

By Hritam Mukherjee and Kashish Tandon

Dec 16 (Reuters) -India's benchmark equity indexes fell on Monday, as uncertainty about the U.S. interest rate trajectory beyond the reduction expected this week weighed on IT companies, while metal stocks fell after underwhelming economic data from top consumer China.

The Nifty 50 .NSEI ended down 0.4% at 24,668.25 points, while the BSE Sensex .BSESN declined 0.47% to 81,748.57. Last week, the benchmarks notched their longest weekly winning run since July.

Seven of the 13 major sectors fell on Monday, with metals .NIFTYMET and IT firms .NIFTYIT leading the losses.

The more domestically-focussed smallcaps .NIFSMCP100 and midcaps .NIFMDCP100 rose 0.6% and 0.77%, with analysts attributing the outperformance to potentially stronger earnings for the ongoing quarter.

Indian IT firms, which earn a bulk of their revenue from the U.S., fell 0.74% on the day, with Tata Consultancy Services TCS.NS down 1.3% after Citi reportedly held its "sell" call on the stock.

All eyes are now on the Federal Reserve's monetary policy decision on Wednesday. With a 25-basis-point rate cut near-certain, commentary on rate cuts in 2025 will be closely watched.

"Markets are pricing in that Fed's 2025 rate cut timeline may be less certain... with a strong possibility that the policy easing cycle may see a pause and get pushed by a couple of quarters," said Aishvarya Dadheech, chief investment officer of Fident Asset Management.

U.S. rate cuts help emerging market assets, such as Indian equities, as they boost foreign inflows.

On the day, thirty-five constituents in the 50-member Nifty index fell, with the heaviest stock HDFC Bank HDBK.NS down 0.4%.

Metal stocks slipped 1%, tracking weak global prices after China's retail sales were weaker than expected, keeping pressure on Beijing to ramp up stimulus as it braces for more U.S. trade tariffs under a second Trump administration. MET/L

Tata Steel TISC.NS, JSW Steel JSTL.NS and Hindalco HALC.NS each fell about 1%.

Reporting by Hritam Mukherjee and Kashish Tandon in Bengaluru; Editing by Sumana Nandy, Varun H K, Sonia Cheema and Mrigank Dhaniwala

</body></html>