Indian shares slump on caution before Fed meeting

Indian shares slipped on Tuesday, on across-the-board selling as investors braced for the Federal Reserve’s monetary policy meeting for clues on its rate cut path next year.

The NSE Nifty 50 fell 1.35% to 24,336 points as of 3:30 p.m. IST, while the BSE Sensex declined 1.3% to 80,684.45.

All sectoral indexes apart from media fell. The more domestically-focussed smallcaps and midcaps declined 0.7% and 0.8%, respectively.

The Indian rupee weakened to its lifetime low.

Two analysts said foreign investors likely sold stocks, after data showed India’s trade deficit widened to a record level in November.

While a quarter-point rate cut at the end of Fed’s two-day meeting on Wednesday is widely expected and priced in, markets are bracing for the central bank to scale back its easing in 2025 in anticipation of higher inflation under the Donald Trump administration.

Indian market sentiment was bogged down by selling pressure as foreign investors waited for clues on further monetary policy easing by Fed on Wednesday, Sunny Agrawal, head of fundamental equity research at SBICaps Securities, said.

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

Financials, the heaviest sector on the Nifty 50, dropped 1.44%, dragged by a 1.7% fall in HDFC Bank after the private lender received a regulatory warning alleging non-compliance with provisions for disclosures.

Reliance Industries - another Nifty heavyweight - slipped 1.8%, dragging the energy index 1.6% lower.

IT firms, which get a bulk of their revenue from the U.S., dropped 0.5%.

Foreign investors net sold Indian shares worth 2.79 billion rupees ($32.87 million) on Monday. Data for Tuesday are expected later in the day.

Monetary easing in the United States typically helps emerging market assets, such as Indian equities, as they boost foreign inflows.

Among individual stocks, Zomato ended about 1% higher after brokerage Nuvama said it expects the food delivery platform to see inflows of nearly $513 million when it gets added to the BSE Sensex on Dec. 23.