Having started the day on a high, the benchmark indices gave away to selling pressure in the late hours of trading, dragged down by weakness in banking and FMCG stocks.
The Nifty 50, having touched a new record high of 24,350 in morning trade, later settled 90 points down at 24,246, down 0.37% from its last close. Likewise, the BSE Sensex fell 272 points or 0.34% to close the session at 80,016. This reversal followed after both indices had hit a new record high earlier during the day, on the back of a spurt of profit booking by the investors.
Sectoral Performance
The overall market witnessed mixed action. Nifty Bank lagged, declining close to 0.7%, led lower by HDFC Bank, ICICI Bank, and Axis Bank. FMCG shares such as Hindustan Unilever and ITC also faced pressure, probably due to fears regarding rural demand and input cost pressures.
At the same time, some sort of resilience was witnessed in the auto and IT industries. The Nifty IT index rose nearly 0.5%, with TCS and Infosys supported by firm cues from global IT stocks. Auto giants such as Mahindra & Mahindra and Tata Motors also ended in the green, aided by April sales data that beat estimates.
Top Nifty losers were HDFC Bank, ITC, Adani Enterprises, and Nestle India. Top gainers were Tata Motors, Tech Mahindra, Infosys, and Power Grid.
Market Sentiment & Global Cues
Investor sentiment was cautious ahead of critical macroeconomic data releases and the U.S. Federal Reserve policy announcement later tonight. As long as inflation remains a worry worldwide, investors are closely observing whether the Fed gives any hint on the timing of rate cuts, which will impact foreign fund inflows to emerging economies such as India.
On the international front, Asian markets were mostly mixed. Although Japan’s Nikkei was slightly up, China and South Korean markets were subdued. European stocks opened flat amidst earnings announcements and expectations of the Fed’s comments.
Broader Markets & Volatility
The wider markets also corrected a bit. The BSE Midcap index declined 0.20%, and the Smallcap index lost 0.15%, hinting at profit-taking on all fronts. Market breadth was weak with more falling stocks than advancers on both the NSE and BSE.
India VIX, the volatility gauge, increased by 3% to close above the 11.50 level, reflecting a mild increase in nervousness among traders in the run-up to major global events.
Expert Commentary
Market experts think that the recent upsurge has priced the valuations slightly extended in some areas, initiating spasmodic corrections. Opines veteran investor Ramesh Damani, “The market is displaying classic signs of consolidation. Although the long-term narrative is very much in place, we could witness episodes of profit-booking and range-bound activity in the near term.”
Technical experts pointed out that 24,200 is an important short-term support for the Nifty. If the index crosses below it convincingly, another correction towards 23,900–24,000 cannot be eliminated. On the other hand, crossing above 24,400 would continue to propel the uptrend.
Looking Ahead
The immediate trajectory of the market will be based on signals from the U.S. Fed, international inflation figures, and domestic profit reports. The development of the monsoon forecast is also something investors will watch, as this can have a dramatic effect on consumption and agri-related sectors.
Although today’s red closing could temporarily affect mood, overall Indian equities remain in a bullish trend based on firm domestic inflows, good corporate earnings, and sound macroeconomic environment.
