Benchmark stock market indices ended lower on Monday, continuing a bearish trend that has been observed in recent days. The S&P BSE Sensex dropped by 348.55 points to close at 81,748.57, and the NSE Nifty50 fell by 100.05 points, settling at 24,668.25. The decline in these indices was driven by broad-based selling, with specific pressure in IT, Metal, and FMCG sector stocks, which underperformed throughout the day. This downturn highlights the continued cautious sentiment among investors, who seem to be increasingly wary about the future direction of the market amidst global and domestic uncertainties.
Vinod Nair, the Head of Research at Geojit Financial Services, explained that the national market traded in a range-bound manner throughout the day. While the overall sentiment remained subdued, the realty sector stood out as a relative outperformer. The sector gained traction amid expectations of rising demand for real estate and speculation that India could enter a rate-cut cycle in 2025. Additionally, strong manufacturing and service PMI data pointed toward a possible positive shift in earnings growth in the second half of FY25, which could potentially limit further earnings downgrades for FY25.
Despite these optimistic signs, investors remained cautious in the face of macroeconomic factors. The rise in US 10-year bond yields and the strengthening of the US dollar kept global market participants on edge. Nair pointed out that this ongoing uncertainty around US monetary policy was also influencing market sentiment in India. With the US Federal Reserve meeting scheduled in the coming days, market watchers are eagerly anticipating the Fed's policy stance and its commentary on 2025 interest rate projections.
Vaibhav Vidwani, Research Analyst at Bonanza, noted that the market's overall mood was tempered by caution as investors awaited key economic data and the outcome of the upcoming US Federal Reserve meeting. This uncertainty about global monetary policy, combined with concerns over inflation and potential recessions in major economies, led to a consolidation phase in the Indian markets. The mixed global cues, especially from the US and Europe, further contributed to the restrained trading environment, as many investors chose to stay on the sidelines until more clarity emerged.
The sectoral performance was a mixed bag. The realty and pharma sectors were among the few to buck the overall downward trend, posting gains during the day. In contrast, the IT, Metal, and Energy sectors saw considerable pressure, which led to broader declines in the market. This divergent performance across sectors underscores how investor sentiment is not uniformly distributed, with some sectors benefiting from specific tailwinds, while others struggle amid broader economic concerns.
Interestingly, while the benchmarks were down, the broader indices showed a more positive performance. The broader market indices managed to outperform the benchmark indices, each advancing by over half a percent. This suggests that there is still significant strength in select pockets of the market, with investors finding opportunities outside the larger, more widely traded stocks.
Ajit Mishra, Senior Vice President of Research at Religare Broking, offered a technical perspective, noting that the Nifty continues to face resistance at the 24,800 level, which has proven to be a critical point for the index in recent weeks. The volatility index (India VIX) has shown intermittent spikes, adding further challenges to a bullish outlook. However, Mishra remained optimistic about the long-term prospects for the market, particularly within the banking and IT sectors, which continue to show resilience despite the broader market's weakness. He recommended that traders look for opportunities to capitalize on intermediate dips in the market, particularly by adding quality stocks from outperforming sectors. He also emphasized the importance of managing positions carefully in the face of ongoing volatility, as market conditions remain unpredictable.
In conclusion, Monday's trading session reflected ongoing market consolidation, driven by cautious investor sentiment and mixed sectoral performance. While some sectors, such as realty and pharma, performed relatively well, broader indices faced significant downward pressure. As the market awaits key economic data releases and the US Federal Reserve's policy meeting, investors are likely to remain cautious in the near term. However, despite the short-term challenges, there are still pockets of strength in the market, and select sectors and stocks continue to show promise.
