After a positive year, Sensex witnesses worst December in 10 years

The year 2022 has been a good one for the benchmark Sensex, but it had the worst December in 10 years. The Sensex declined 3.5 per cent in December - its worst last-month returns since 2011.

A bit of profit-booking and the US macroeconomic data, which challenged the market assumption of peaking interest rates, led to the rout.

The US Federal Reserve (Fed) raised its benchmark rate by 50 basis points (bps) in December, after four back-to-back 75-bp hikes.

Fed Chair Jerome Powell said the size of the next rate hike would be data-dependent and denied rumours of the central bank reversing its hikes next year.

Analysts say the market was hoping for a less hawkish tone from the Fed, which was missing. And data further validated Fed’s stance.

Analysts say this divergence of views between central bankers and investors will add to volatility in the next quarter.