No respite for market; Sensex, Nifty extend fall for 6th straight session ahead of inflation, IIP data

Indian benchmark indices, Sensex and Nifty, continued their losing streak for the sixth straight session on Wednesday, weighed down by index heavyweights Reliance Industries, M&M, TCS, Infosys, ITC, Adani Ports, PowerGrid, and IndusInd Bank. The BSE Sensex has lost 2,413 points in six trading day, while the NSE Nifty declined 694 points, which can be primarily attributed to significant selling by foreign institutional investors (FIIs), looming threat of a global trade war, rising U.S. bond yields, and weak corporate earnings.

The equity market witnessed sharp volatility today amid persistent uncertainties about U.S. government tariff plans, but regained ground in the last few hours of the day’s trade. Paring most of the early losses, the 30-share Sensex closed 122 points lower at 76,171, and the Nifty50 settled 26.5 points down at 23,045. The broader market also settled marginally lower by 0.5% each, recovering from intraday losses amid value buying in the final hours of day’s trade.

"The Indian market saw a slight recovery from the sharp intraday declines; however, overall sentiment remained weak due to elevated broader market valuations and muted Q3 earnings growth. Concerns over excessive valuations are expected to sustain the ongoing consolidation phase. Investor confidence was further undermined by the Fed’s statement that it is "not in a hurry to lower interest rates" and intends to "pause rate cuts to assess further progress in inflation," says Vinod Nair, Head of Research, Geojit Financial Services.

However, uncertainty regarding the impact of metal tariffs added to market caution. The upcoming release of U.S. CPI inflation data will provide further market direction, with prevailing expectations indicating minimal change in inflation, a scenario that could exert additional pressure on investor confidence, he adds.

Early during the trade, the Sensex declined as much as 905 points, 1.2%, to hit an intraday low of 75,388, and the Nifty50 slumped 273 points, or 1.2%, to touch day’s lowest level of 22,798. Similarly, the BSE midcap and smallcap indices dropped as much as 2.9% and 3.6%, respectively.

The market witnessed strong buying in final hours of the day’s trade ahead of the headline retail inflation and industrial production (IIP) data, key metrics used by the Reserve Bank of India (RBI) to take a call on monetary policies, set to be released today. Investors will also keep an eye on the U.S. CPI data due later in the evening, which will shape sentiment around interest rate expectations and capital flows.

Top gainers and losers

The top five losers on the BSE Sensex pack were Mahindra and Mahindra, ITC, IndusInd Bank, PowerGrid, and Reliance Industries, falling in the range of 1.5% to 3%.

On the other hand, Bajaj FinServ, Tata Steel, L&T, Kotak Mahindra Bank, and UltraTech Cement were among notable gainers, rising up to 2.7%.

The market breadth, indicating the overall strength of the index, was negative as 2,418 shares declined and 1,554 advanced, out of total traded shares of 4,066 on the BSE. As per the exchange data, 45 stocks hit their 52-week highs, while 721 touched their lows; 137 stocks hit the upper circuit, and 372 slipped to their lower circuit limits.

Sectoral indices on the NSE ended on a mixed note, with Nifty IT, auto, FMCG, pharma, and healthcare indices emerging as top losers, while banking, financial services, and metal space ended in positive terrain. The Nifty Realty index was the top laggard with a 2.74% loss. Among the broader markets, the Nifty Midcap100 and Nifty Smallcap100 indices closed 0.26% lower each. 

Technical outlook

Technically, Nifty closed with a long legged Doji formation after a day of high volatility. On the lower end, the index found support just above the previous swing low, says Rupak De, Senior Technical Analyst at LKP Securities. “Until the previous low of 22,786 is broken decisively, the chances are high that Nifty might recover towards 23,500–23,600 in the near term. Immediate resistance is placed at 23,200, while immediate support is at 23,000," he said.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)