The S&P BSE Sensex ended the day down by 241.30 points, settling at 77,339.01, while the NSE Nifty50 dropped by 78.90 points, closing at 23,453.80. This marked another day of losses for the benchmark stock indices, extending their losing streak. The decline was primarily driven by a fall in IT, energy, and pharmaceutical stocks, reflecting a broader market consolidation.
Vinod Nair, Head of Research at Geojit Financial Services, noted that the market's downturn was exacerbated by a slowdown in earnings growth and a weakening rupee, which was affected by inflationary pressures. Additionally, the IT sector saw a negative reaction, especially in the wake of reduced expectations of a Federal Reserve rate cut in December, which could delay spending, particularly in the BFSI (Banking, Financial Services, and Insurance) segment. Despite these challenges, metal stocks gained some ground, spurred by China's decision to reduce tax rebates on aluminum and copper, which buoyed the sector.
Metal stocks led the gainers, with Hindalco surging by 3.79% and Tata Steel advancing by 2.33%. The auto sector showed resilience, with Hero MotoCorp gaining 2.69%, supported by strong performances in consumer goods companies as well. Nestle India rose by 1.47%, and Hindustan Unilever added 1.46%, reflecting a positive sentiment within the FMCG (fast-moving consumer goods) segment.
On the other hand, IT and pharmaceutical stocks struggled. Technology giant TCS witnessed the steepest fall, dropping 3.11%, while Infosys fell 2.65%. Pharmaceutical stocks were also under pressure, with Dr Reddy’s declining by 2.75% and Cipla losing 2.38%. Energy stocks were similarly weak, with BPCL slipping 2.62%.
Sector-wise, the performance was mixed. While metals, FMCG, and auto sectors posted gains, the IT and energy sectors remained under significant pressure. Broader indices also showed varied results: the midcap index remained flat, while the smallcap index dropped by nearly half a percent. This mixed performance indicates that while some sectors are resilient, others are facing continued challenges.
Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd., highlighted that Nifty had fallen below its major support level at the 200-day exponential moving average (EMA) after a brief pause, signaling that the bears are in control. However, he noted that oversold conditions in key stocks across various sectors were slowing down the pace of the decline. Mishra recommended maintaining a cautious outlook on the index and focusing selectively on stock-specific opportunities in the current volatile environment.
Overall, despite gains in some sectors like metals and FMCG, the broader market sentiment remains cautious, with the overall direction influenced by concerns over earnings growth, inflation, and geopolitical factors. The market's ability to recover in the short term will depend on how these factors evolve, with analysts suggesting a wait-and-watch approach.
