Stock Market Crash Today: Fed forecast roils D-St! Investors lose Rs 6 lakh crore within minutes as Sensex crashes 1,000 pts

Indian benchmark equity indices opened sharply lower on Thursday, with the Sensex plunging over 1,000 points and the Nifty falling below the 24,000 mark. The decline followed the US Federal Reserve’s projection of fewer interest rate cuts in 2025, citing persistent inflation and the resilience of the world’s largest economy.

The market capitalization of all listed companies on the BSE decreased by Rs 5.94 lakh crore to Rs 446.66 lakh crore.

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HDFC Bank, Infosys, ICICI Bank, Reliance Industries, SBI, and HCL Tech together accounted for a 600-point drop in the Sensex. Axis Bank, M&M, Kotak Bank, and Bajaj Finance also contributed to the decline.

US rate-sensitive domestic IT firms, which derive a significant portion of their revenue from the US, opened up to 5% lower, led by LTIMindtree, Mphasis, and Wipro.

Meanwhile, the India VIX fear gauge surged 5% to 14.37.

Factors1) Fed signals fewer rate cutsThe US Federal Reserve announced a 25-basis-point rate cut overnight, as widely expected, but its forecast of only two quarter-point reductions in 2025 was lower than the three or four cuts anticipated by markets. This reduced easing projection—half a percentage point less than expected—triggered concerns among investors.

The odds of a January 2025 rate cut dropped to 6% in early Asian trading hours on Thursday, down from 16% before the Fed’s decision, according to the CME FedWatch tool.

Rate cuts in the US typically help emerging market assets, such as Indian equities, as they boost foreign inflows.

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“When valuations are high the market needs only a trigger to correct sharply. This trigger was provided by the Fed guidance of fewer rate cuts in 2025, which went against market expectations,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

“The Fed chief’s comments regarding the economy and the labour market are, in fact, positive, suggesting a resilient US economy. But always the market gets spooked when the reality falls short of expectations,” Vijayakumar added.

2) Rise in Bond Yields and Strong Dollar

The yield on benchmark US 10-year notes touched a seven-month high of 4.524% on Wednesday and was last at 4.514%.

The shifting expectation of Fed rate cuts lifted the dollar index, which measures the US currency against six rivals, to its highest since November 2022 on Wednesday. It was last at 108.15 in early trading on Thursday.

Higher bond yields make US assets more attractive, leading to capital outflows from emerging markets like India. Additionally, a stronger dollar increases the cost of foreign capital, discouraging investment and further weighing down market sentiment.

“The dollar index rising above 108 and the 10-year bond yield spiking to 4.52 % are clearly negatives from the perspective of FII fund flows. But this is likely to be only temporary,” said Vijayakumar.

3) Decline in Global Markets

See more : Stocks fall sharply after Federal Reserve signals fewer rate cuts than expected for 2025

US stocks finished lower on Wednesday, with the Dow Jones Industrial Average posting its worst day in over four months after the Federal Reserve decided to lower its benchmark interest rate by 25 basis points to 4.25-4.50% range but reduced its forecast for further rate cuts in 2025.

The S&P 500 saw its worst loss on a rate decision day since 2001, while the Dow posted its 10th consecutive decline, marking its longest losing streak since October 1974.

Asian stocks followed suit on Thursday. Japan’s Nikkei 225 dropped 0.8%, China’s Shanghai Composite fell 0.72%, and Korea’s Kospi declined 1.5% as of 9:43 IST.

4) Technical Triggers

Nifty formed a 3 black crows pattern after falling for three consecutive days, signaling a potential reversal of the bullish uptrend.

“The next critical level is the November 28 trough of 23,873. A drop below this would invalidate the bullish head-and-shoulders pattern with a target of 25,500, making the 23,300 lows more vulnerable. Immediate resistance is at 24,500. Options data also indicates a shift to lower movement ranges, with call sellers increasingly shorting strikes closer to the current price, reflecting a more aggressive bearish stance,” said Akshay Chinchalkar, Head of Research at Axis Securities.