Indian equity benchmarks declined on Monday as IT stocks bore the brunt of investor caution ahead of the US Federal Reserve’s highly anticipated policy decision. The 30-share BSE Sensex fell 1,125 points (1.5%) to close at 71,234, while the 50-stock NSE Nifty dropped 325 points (1.4%) to settle at 21,305, marking their lowest levels in over three weeks. The market slide was primarily driven by sharp losses in IT sector giants such as Tata Consultancy Services (TCS), Infosys, and Wipro, which collectively dragged the indices lower amid renewed concerns over global growth and interest rate trajectories.
The Fed’s meeting outcome, expected later in the day, remained the central focus for global investors. Markets are braced for potential signals about the path of US monetary policy, particularly regarding the timing of rate cuts in 2024. Historical patterns suggest that Fed decisions heavily influence capital flows into emerging markets like India, where foreign institutional investors (FIIs) have been net sellers for most of this month. The rupee also weakened to 83.15 per dollar, reflecting broader risk-off sentiment and dwindling foreign inflows.
Analysts noted that IT stocks faced additional pressure from a stronger dollar against major currencies, which erodes earnings for export-dependent firms. TCS shares plunged 4.2%, Infosys fell 3.8%, and Wipro dropped 5.1%, accounting for nearly 40% of the Nifty’s total decline. Other heavyweights such as HDFC Bank and ICICI Bank also saw losses, though at a more moderate pace. Market participants highlighted that the Fed’s guidance on inflation outlook and economic projections would be critical in determining near-term market direction.
Broader Asian markets also traded lower ahead of the Fed announcement. Japan’s Nikkei fell 1.3%, while Singapore’s Straits Times Index declined 0.9%. MSCI’s Asia-Pacific index was down 1.1%, with most regional markets trending negatively. Oil prices added to the cautious mood, with Brent crude rising 0.7% to $84.3 per barrel on supply concerns, further pressuring equity markets. Domestic investors remained on the sidelines, with trading volumes on the NSE falling to 1.2 billion contracts, below the 10-day average.
Technical analysts pointed to key support levels for the Nifty at 21,000 and 20,800, warning that a breach could trigger accelerated selling. “The market is clearly positioning for a cautious outcome from the Fed,” said Rajesh Bhayia, head of equity strategy at ICICI Securities. “We’ve seen a clear shift in FII activity from net buying to selling, and that trend may continue unless the Fed provides clear guidance on easing monetary policy.” The RBI’s recent interventions to stabilize the rupee have also limited options for domestic institutions, further constraining market liquidity.
Sector-wise, auto stocks showed resilience with Maruti Suzuki gaining 0.5%, while consumer goods firms such as Hindustan Unilever managed small gains. However, the overall sentiment remained negative, with the India VIX volatility index spiking 12% to 17.8, reflecting heightened investor anxiety. Portfolio managers advised clients to adopt defensive positioning, focusing on sectors with stable cash flows and lower beta exposures. The coming weeks are expected to be volatile as markets digest the Fed’s decision, global macroeconomic data, and corporate earnings reports from key Indian companies.
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