{"id":49402,"date":"2024-12-19T13:36:00","date_gmt":"2024-12-19T08:06:00","guid":{"rendered":"https:\/\/www.equentis.com\/blog\/?p=49402"},"modified":"2025-11-07T11:52:27","modified_gmt":"2025-11-07T06:22:27","slug":"us-fed-cuts-rate-gift-nifty-and-nifty50-crashes","status":"publish","type":"post","link":"https:\/\/www.equentis.com\/blog\/us-fed-cuts-rate-gift-nifty-and-nifty50-crashes\/","title":{"rendered":"US Fed Cuts Rate by 0.25%: Gift Nifty and Nifty 50 Crashes, VIX Spikes 15%, Dollar Dominates"},"content":{"rendered":"
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Have you been tracking the markets lately? If so, the recent developments may have left you questioning the stability of global<\/a> equities and currencies. Let\u2019s explain what\u2019s happening and why the US Federal Reserve\u2019s latest decision has triggered such significant market movements.<\/p>\n\n\n\n

The Nifty50 Under Pressure<\/strong><\/h2>\n\n\n\n

The Indian equity benchmark, the Nifty<\/a> 50, has been reeling under pressure, with a three-day losing streak that saw it shed 550 points. On Wednesday, it nearly breached last Friday\u2019s low of 24,190, signaling a growing bearish sentiment. Adding to the tension, today marks the weekly options expiry for Nifty 50<\/a> contracts, further amplifying market volatility.<\/p>\n\n\n\n

Gift Nifty Indicates a Worrying Opening<\/strong><\/h2>\n\n\n\n

As of 7:15 AM, the Gift Nifty, which indicates how the Indian equity markets<\/a> may open, was down by 320 points. This points to a gap-down start for both the Nifty 50 and Sensex<\/a>. By the time trading commenced, the Gift Nifty was trading 340 points lower, or 1.4% below yesterday\u2019s close. Within the first 10 minutes of trade, Nifty fell 290 points, bringing it below the 24,000 mark and even breaching 23,900 at one point.<\/p>\n\n\n\n

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Source: <\/strong>MoneyControl<\/strong><\/a><\/figcaption><\/figure>\n\n\n\n

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Indian Markets Feel the Heat<\/strong><\/h2>\n\n\n\n

The opening bell on Thursday painted a harsh picture for Indian markets. At 9:15 AM, the Sensex was down 717.57 points, or 0.89%, to 79,464.63, and the Nifty fell 217.10 points, or 0.90%, to 23,981.75. This marked a continuation of the bearish trend, with all sectors trading in the red.<\/p>\n\n\n\n

The Gift Nifty\u2019s sharp decline signals that Indian equities are not immune to these global headwinds. Over the last three sessions, Indian markets have lost nearly 600 points due to profit booking and caution ahead of the Fed\u2019s decision. Thursday\u2019s sharp drop added to these woes as sectors across the board faced selling pressure.<\/p>\n\n\n\n

Sectors like IT, Auto, and Banking bore the brunt of the selling pressure, with indices such as Nifty IT, Nifty Auto, and Bank Nifty falling by up to 2%. IT stocks, in particular, witnessed sharp selling as investors rushed to offload their holdings, reflecting diminished hopes of further rate cuts. This capped the tailwinds for the export-oriented services sector.<\/p>\n\n\n\n

Notable losers on the Nifty 50 included Wipro<\/a>, Hindalco, and Infosys, which dragged the index down.
Source: <\/strong>Money Control<\/strong><\/a><\/p>\n\n\n\n

Wall Street\u2019s Longest Losing Streak Since 1974<\/strong><\/h2>\n\n\n\n

This grim start to the trading day follows a sharp sell-off on Wall Street, where the Dow Jones Industrial Average recorded its 10th consecutive day of losses. The Dow plunged nearly 1,100 points or 2.5%, marking its longest losing streak in 50 years. The S&P 500 and Nasdaq<\/a> Composite weren\u2019t spared either, falling by 3% and 3.3%, respectively.<\/p>\n\n\n\n

The Trigger: US Federal Reserve\u2019s Rate Cut<\/strong><\/h2>\n\n\n\n

The US Federal Reserve announced a 25 basis point (bps) interest rate cut, bringing the target range to 4.25-4.5%. While the rate cut was widely anticipated, the Fed\u2019s updated projections caused a stir. The Fed now expects just two instead of the four rate cuts forecasted for 2025 in its September projections. Fed Chair Jerome Powell emphasized this cautious outlook on future rate cuts and reiterated the central bank\u2019s commitment to taming inflation<\/a>.<\/p>\n\n\n\n

Global Market Fallout<\/strong><\/h2>\n\n\n\n

The Fed\u2019s cautious tone triggered a widespread sell-off across asset classes:<\/p>\n\n\n\n