Sensex, Nifty Slip Despite Inflation Cheer; US Fed Policy, FII Selling Weigh on Sentiment

India's benchmark indices, Sensex and Nifty, ended in the red today, even as encouraging inflation data failed to uplift market sentiment. The indices extended their losses amid concerns surrounding global cues, particularly the US Federal Reserve's hawkish stance, and persistent foreign institutional investor (FII) selling.

Market Performance

The BSE Sensex closed 250 points lower, settling at 65,800, while the NSE Nifty dipped 70 points to end at 19,600. Sectoral indices witnessed mixed trends, with IT and financials bearing the brunt of the selloff.

On the broader market front, mid-cap and small-cap stocks also faced selling pressure, with the Nifty Midcap 100 and Nifty Smallcap 100 indexes down by approximately 0.5% each.

Inflation Eases but Fails to Spur Optimism

India's retail inflation for November cooled to 4.6%, well within the Reserve Bank of India's (RBI) target range. While this eased concerns of domestic rate hikes, the global outlook remains a dampener.

Analysts noted that the softer inflation figures were offset by a cautious mood stemming from the Federal Reserve's stance, which suggested that interest rates could stay higher for longer.

FII Outflows Continue

Foreign investors net sold ₹1,800 crore worth of Indian equities on Wednesday, marking the fifth consecutive session of outflows. Rising US bond yields and a stronger dollar are diverting capital flows away from emerging markets like India, further pressuring domestic equities.

Global Cues Weigh Heavy

Markets globally have been subdued as investors brace for the outcome of the Federal Reserve's upcoming meeting. While no rate hike is expected in December, the Fed's guidance for 2024 will be closely scrutinized.

Asian markets displayed mixed trends, with Hong Kong’s Hang Seng down 0.7%, while Japan's Nikkei posted modest gains of 0.3%.

Top Gainers and Losers

Among the top gainers on the Nifty were Hindustan Unilever, Power Grid, and Sun Pharma, gaining up to 1.2%. On the losing side, HDFC Bank, Infosys, and Tata Steel dragged the indices lower, with losses ranging from 1.5% to 2.3%.

What Lies Ahead?

Market experts suggest that Indian equities may remain range-bound until more clarity emerges from the global front. Domestic factors such as robust economic data and corporate earnings are expected to provide a cushion, but global headwinds could limit any significant upside.

Investors are advised to tread cautiously, focusing on defensive sectors like FMCG and healthcare amid ongoing volatility.