Benchmark stock market indices closed lower on Friday, driven by a notable fall in information technology (IT) stocks amid continuing worries over the performance of third-quarter earnings. The S&P BSE Sensex ended 423.49 points lower at 65,243.78, while the NSE Nifty50 settled 108.60 points down at 23,203.20. This marked a continuation of the market's volatile trend as the selling pressure from major sectors affected investor sentiment.
The broader market indices were mixed, but the overall market sentiment was weighed down by increased volatility during the trading session. Key sectoral indices, such as Nifty Bank, Nifty Financial Services, and Nifty IT, faced sharp declines, triggering the slide in the market. IT stocks, which have been facing pressure due to investor concerns about earnings growth, led the declines, as market participants digested weaker-than-expected results from some major companies in the sector.
Shares of Infosys plummeted nearly 6% at the closing bell, while Wipro and Tech Mahindra also recorded significant declines. Other top losers included major financial institutions such as Axis Bank, Shriram Finance, and Kotak Mahindra Bank, further deepening the overall market's losses for the day. These losses came despite the broader economic outlook showing potential for growth, highlighting how investor concerns regarding specific sectors were outweighing broader market optimism.
However, despite the downward pressure from these sectors, some stocks in other areas performed relatively well. The top gainers on the Nifty50 included BPCL, Reliance, Coal India, Nestle India, and Hindalco. Among these, Reliance emerged as a standout performer. The company's shares surged by 2.65% during the session, a notable jump that helped limit the losses on Dalal Street. The positive performance came after Reliance posted strong third-quarter results, showcasing its continued strength and profitability even amid broader market challenges.
Vinod Nair, Head of Research at Geojit Financial Services, attributed the declines in the banking and IT sectors to negative impacts on large-cap stocks, leading to a lower overall market close. He pointed out that a cautious outlook on discretionary spending, particularly in the IT sector, has caused investors to reassess their expectations for future growth. Additionally, private banking stocks experienced weakness, driven by concerns over subdued deposit and credit growth in the near term, alongside tightening liquidity conditions. Nair also indicated that investors are likely to remain cautious and adopt a more risk-averse stance as the third-quarter results season unfolds, with uncertainty over future earnings weighing heavily on market participants.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, further emphasized that rising US bond yields were a significant factor keeping local investors on edge. The increase in bond yields has created a more uncertain environment for global markets, with many investors concerned about its impact on riskier assets like equities. This, combined with continued foreign institutional investor (FII) outflows from domestic equities, has added to the pressure on Indian stocks. Additionally, geopolitical uncertainties, particularly the ongoing global tensions and concerns about the pace of US rate cuts, have exacerbated investor anxiety. These factors together have kept the market volatile and uncertain, with no clear direction in sight for the immediate future.
As market participants navigate these challenges, there is still hope that some sectors, such as energy, consumption, and select industrials, may continue to outperform, offering pockets of opportunity for investors. However, the broader outlook remains uncertain, with a balance between the optimistic earnings results from select companies and the caution surrounding the overall economic environment. Investors are likely to continue closely monitoring global cues and domestic economic indicators in the coming weeks, with a focus on corporate earnings, fiscal policy, and global interest rate trends.
