Benchmark stock market indices ended the session on a negative note, reflecting heightened volatility due to concerns over weaker-than-expected third-quarter (Q3) corporate earnings and broader economic uncertainties. The S&P BSE Sensex closed 50.62 points lower at 78,148.49, while the NSE Nifty50 declined by 18.95 points, settling at 23,688.95. Both indices experienced a decline of about 0.8% during the session but managed to recover slightly from their intraday lows, thanks to some late-session buying activity.
The market's instability was primarily attributed to the latest business updates from companies, which painted a bleak picture for corporate profitability. The announcements have raised concerns that the profit growth seen in previous quarters might not continue at the same pace, causing investors to reassess their expectations for the upcoming earnings season. This uncertainty led to widespread caution among market participants, contributing to the day's volatility.
Vinod Nair, Head of Research at Geojit Financial Services, explained that the market's nervousness was driven by two main factors: slowing economic growth projections and the cautious approach investors are taking ahead of Q3 earnings reports. “Slowing economic growth projections and caution ahead of Q3 numbers added volatility in the market,” Nair stated. Although there was a recovery from the day's lowest point, driven by institutional buying of blue-chip stocks, he highlighted the broader economic concerns that weighed on investor sentiment.
Nair also emphasized the role of government policy expectations, noting that there was hope among market participants that the upcoming budget could bring about significant reforms to invigorate the economy. However, he pointed out that these hopes were tempered by the global economic environment, particularly the rise in US bond yields and concerns that the US Federal Reserve might be less aggressive with interest rate cuts than previously expected. "The near-term sentiment is likely to be subdued due to the rise in US bond yield and fear of fewer rate cuts by the Fed," Nair concluded, adding to the sense of caution that investors are experiencing.
On the technical front, Vatsal Bhuva, Technical Analyst at LKP Securities, offered some insight into the Nifty index's movement. He noted that the Nifty was currently trading within a defined range of 23,500 to 24,200, which indicated some consolidation in the market. During Wednesday's session, the index formed a hammer candlestick pattern on the daily chart, closing near its 200-day Exponential Moving Average (EMA). This technical formation reinforced the 23,500 support level, suggesting that the index might hold above that threshold in the near term.
Bhuva also pointed out that any decisive move in the market would depend on whether the Nifty could hold above the 24,000 level, which would pave the way for a potential rally toward 24,500. On the other hand, if the index were to close below the 23,500 mark, it could trigger a period of intensified selling, which would further test market sentiment. For traders, monitoring these critical technical levels will be essential to gauge the next steps for the market, as the direction of future movements hinges on the index's ability to either break through resistance or fall below established support.
Overall, the market is navigating a period of uncertainty, and much of the sentiment will depend on how the global economy, corporate earnings, and government policy evolve in the coming weeks. Investors will be closely watching not only domestic data but also international economic indicators, including the pace of interest rate changes in the US and the ongoing developments in the global supply chain and commodity markets. As earnings reports begin to roll in, market participants will be looking for signals of whether the economic slowdown is deeper than expected or if recovery is still within reach.
