The Indian stock market faced a significant decline on Tuesday, December 17, with the benchmark indices, Sensex and Nifty50, both dropping by around 1%. This marks the second consecutive day of losses, as investors adopted a cautious stance ahead of the crucial US Federal Reserve meeting scheduled for December 18. The meeting is expected to provide insights into the Fed's approach to future rate cuts, which has left investors on edge.

The BSE Sensex fell by 807 points, or 1%, reaching a low of 80,941.61 during the day. Similarly, the Nifty50 saw a drop of 247.75 points, also down by 1%, touching its intra-day low of 24,420.5. However, the broader markets performed slightly better, with the Nifty Midcap and Nifty Smallcap indices experiencing a minor decline of just 0.06% each.

Global Influences and Domestic Pressures

Globally, markets are closely watching the outcome of the US Federal Open Market Committee (FOMC) meeting on Wednesday. While a 25 basis point rate cut is largely expected, the focus will be on the comments from the Fed Chairman. A shift away from a dovish stance could negatively impact the markets, although this is seen as a remote possibility. Positive data from the US, such as the strong services PMI at 58.5%, signals a resilient economy, which could be good news for markets globally.

On the domestic front, India's trade deficit surged to $37.8 billion in November, which is expected to put pressure on the Indian rupee, potentially pushing it to 85 against the dollar. A weaker rupee could benefit exporters, particularly in the IT and pharmaceutical sectors. However, for importers, the rising import costs could have a negative impact on stock prices.

Stock and Sector Performance

Among the stocks on the Sensex, Adani Ports was the only one to register positive gains, while the other 29 stocks experienced losses. Heavyweights such as HDFC Bank, Reliance Industries, ICICI Bank, Bharti Airtel, and L&T were among the biggest laggards.

On the Nifty50, four stocks viz. Adani Ports, Cipla, Adani Enterprises, and Tata Motors, were in the green, while the remaining 46 stocks saw a decline. The biggest losers included Shriram Finance, Bajaj FinServ, Grasim, Bharti Airtel, and PowerGrid.

Sector-wise, the Nifty Bank, Nifty Financial Services, and Nifty Oil and Gas indices all lost more than 1% each. The Nifty Auto, Nifty FMCG, Nifty IT, and Nifty Metal indices declined by over half a percent. On a positive note, the Nifty Media and Nifty Realty sectors posted gains, rising by around 1% each.