"Today's Market Report: Sensex Drops by Over 1,000 Points, Nifty 50 Settles Near Daily Lows - Unraveling the 5 Factors Behind the Market Decline."

"Market Wrap-Up: Sensex Concludes More Than 1,000 Points Lower at 70,385.09, Nifty 50 Ends the Day at 21,106.40, Down by 346 Points." 

• "Stock Market Today: As bears dominated Wall Street during midday on Wednesday, December 20, the domestic benchmarks, the Sensex and Nifty 50, closed with sharp declines. Market watchers blamed profit-taking for the decline, and they thought that an improvement was long overdue because of lengthy analyses of mid-cap and small-cap stocks.

Sensex, Nifty 50 settled lower on December 20

The BSE Sensex, which is composed of thirty stocks, closed at 70,385.09 today, down 1,052.10 points, or 1.47%. In the meantime, the Nifty 50 finished the day at 21,106.40, down 346 points, or 1.62%. December saw nearly 7% growth on the Nifty 50, which is the highest it has done since July 2022

The Nifty Smallcap 100 Index dropped by 5% to close at 14,951, while the Nifty Midcap 100 Index dropped by 4.5% from the day's high. In anticipation of a rate reduction in the first quarter of 2024, IT companies, which rely heavily on the US market for a large portion of their revenue, have seen a 10% increase in share prices in the first half of 2024.

The rupee stabilized at Rs 83.18 against the US dollar due to significant profit-taking and heavy selling in the equity markets caused by concerns over oil supply via the Red Sea route

Foreign exchange traders observed that the outflow of foreign funds amid fluctuations in crude oil prices was exerting pressure on the currency, despite support from the US Dollar Index below the 102 levels. The dollar index, which gauges the value of the US dollar relative to a group of six other currencies, increased by 0.08% on Wednesday to close at 101.87.

The following are the top 5 causes of today's market decline:

• Effect of Global Cues on Sentiment: Expectations that Japan's decision to maintain low interest rates would lead to similar trends in other regions of the world led to Asian shares largely continuing their upward trend on Wednesday, following their high levels on Wall Street. After two days, the US markets increased and the price of crude oil stayed mostly stable.

• Profit Booking: On Wednesday, investors took profits, causing the Nifty 50 to have its worst session in nine months. Analysts speculated that the domestic market saw a sudden and severe sell-off in the second half, despite encouraging trends in global competition.

The small- and mid-cap indices both displayed weakness, with losses of 3.63% and 3.27%, respectively, falling below benchmark levels. The broad market decline was concentrated more on the domestic front. For small-caps, this was the worst session in three months; for mid-caps, it was the worst in twelve months.

• Increase in COVID Cases: Across the nation, 21 cases of the COVID-19 subvariant JN.1 have been reported. Nineteen cases have been reported from Goa, and one case each from Kerala and Maharashtra. 16 COVID-19-related deaths have been reported in the past two weeks, with multiple fatalities involving severe comorbidities.

• Pressure on the Nifty Bank Index: The Bank Nifty Index saw strong selling pressure, which caused a bearish candle to form on the daily chart. PSU bank shares saw a sharp 2-4% decrease today, including those of Bank of Maharashtra, State Bank of India, and Canara Bank.

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Analyst caution persists despite the market's decline, speculating that the recent rally may have outpaced reasonable valuations following the recent surge, especially in mid- and small-cap stocks. Despite the session's downturn, small- and mid-cap stocks have outperformed the Nifty, which has gained 16.82% thus far in 2023, with growth of 48.06% and 39.72%, respectively."