The Indian stock market closed on a subdued note today as investors booked profits after recent gains and global cues remained mixed. The Nifty 50 settled near the 25,700 mark, while the Sensex slipped over 450 points, led by weakness in banking and financial stocks. Despite positive signals from select sectors like IT and FMCG, selling pressure in heavyweight banking counters kept the indices in negative territory throughout the session.
A Day of Volatility
Thursday’s trading session saw high volatility as both benchmark indices oscillated between gains and losses. The Sensex opened flat at 85,120 but quickly turned negative, dragged by large-cap bank stocks. By the end of the session, the BSE Sensex closed at 84,670, down around 460 points or 0.54%, while the Nifty 50 slipped 130 points to end at 25,702.
Market breadth on the NSE was largely negative, with around 1,150 stocks advancing, 2,000 declining, and 110 remaining unchanged. Analysts pointed out that investors chose to book profits after a strong rally earlier in the week, with attention shifting to global economic cues and upcoming corporate earnings.
Banking Stocks Under Pressure
The banking index was among the worst performers of the day. Major private sector lenders like HDFC Bank, ICICI Bank, and Axis Bank came under heavy selling pressure. The Nifty Bank index fell over 1.2%, reflecting weakness in both public and private sector banks.
Traders attributed the fall to concerns about narrowing net interest margins (NIMs) and slower credit growth in the September quarter. Additionally, rising bond yields and expectations of cautious commentary from bank managements ahead of quarterly results weighed on sentiment.
State-run banks also saw weakness, with State Bank of India (SBI) losing over 1%, while Bank of Baroda and Canara Bank ended lower by nearly 2%. Analysts expect more volatility in banking stocks as investors await cues from the upcoming Reserve Bank of India (RBI) monetary policy review.
IT and FMCG Stocks Provide Some Support
While banks dragged the indices lower, select sectors like IT and FMCG offered some cushion. Infosys, TCS, and Wipro traded in the green, supported by a stable outlook for global technology spending and a softening US dollar. The Nifty IT index gained 0.8%, extending its winning streak to the third consecutive session.
FMCG majors such as Hindustan Unilever, ITC, and Nestle India also managed to hold steady, driven by expectations of strong festive season demand and stable input costs. Analysts noted that defensive sectors like FMCG tend to attract buying interest during periods of market uncertainty.
Broader Market Performance
The broader market mirrored the cautious tone seen in the benchmarks. The Nifty Midcap 100 index slipped 0.6%, while the Nifty Smallcap 100 fell 0.9%, indicating profit booking by retail investors after a sharp rally in smaller stocks over the past few sessions.
Among midcap stocks, Zee Entertainment, TVS Motor, and Crompton Greaves Consumer were among the top gainers, while Vodafone Idea, LIC Housing Finance, and Punjab National Bank saw notable declines.
Market experts warned that valuations in the broader market are running ahead of fundamentals, suggesting a potential short-term correction before the next leg of the rally.
Global Market Cues
Global cues remained mixed as investors awaited fresh signals from the US Federal Reserve regarding interest rate policy. Asian markets ended with mild gains, while European stocks opened slightly higher after upbeat corporate earnings reports.
In the US, Treasury yields remained elevated, keeping risk sentiment in check. Investors continue to monitor geopolitical developments and inflation data from major economies to gauge the outlook for global growth.
Oil prices also remained volatile, with Brent crude trading near 88 dollars per barrel amid concerns about supply disruptions in the Middle East and lower-than-expected inventory data from the US. The rise in crude prices has raised worries about imported inflation for oil-importing countries like India.
Currency and Bond Market Update
The Indian rupee traded largely stable against the US dollar, closing at 83.25, supported by the Reserve Bank’s intervention and lower crude oil prices earlier in the week. However, traders expect the currency to remain under pressure due to strong US dollar demand from importers and foreign fund outflows.
In the bond market, the yield on the benchmark 10-year government bond rose slightly to 7.26%, reflecting investor caution ahead of the RBI’s policy review. Rising global bond yields have also added to the pressure on domestic fixed-income markets.
Expert Opinions and Market Outlook
According to Ajit Mishra, Senior VP at Religare Broking, the market is undergoing a healthy consolidation phase after a strong rally. The decline in banking stocks was expected as investors look for clarity on Q3 margins. However, we see limited downside as long as Nifty holds above 25,500.
Vinod Nair, Head of Research at Geojit Financial Services, added that the weakness in financials dragged the overall market, while defensive sectors like FMCG and IT provided some support. We expect the market to remain range-bound in the near term as investors digest global macro data.
Analysts believe that volatility may continue as the market balances global uncertainties with domestic growth optimism. The upcoming RBI monetary policy, corporate earnings season, and foreign institutional investor (FII) flows are likely to dictate near-term trends.
Foreign Investors Turn Net Sellers
After weeks of net buying, foreign institutional investors turned sellers, booking profits in large-cap stocks. Provisional exchange data showed that FIIs sold shares worth 1,230 crore rupees, while domestic institutional investors (DIIs) remained net buyers to the tune of 980 crore rupees.
Analysts noted that foreign investors have been cautious amid a stronger US dollar and rising US Treasury yields. However, the long-term outlook for Indian equities remains positive, supported by robust GDP growth, strong corporate earnings, and structural reforms.
Key Stocks in Focus
Among the top laggards in the Nifty index were HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Tata Motors, and NTPC, while gainers included Infosys, TCS, Sun Pharma, and ITC.
Shares of HDFC Bank fell over 2% as investors continued to react to concerns about deposit growth and liquidity management after the bank’s merger with HDFC Ltd. On the other hand, Infosys rose 1.4% after the company announced a new digital transformation partnership with a European retail giant.
Technical View: What Charts Indicate
Technical analysts believe that the Nifty is showing signs of consolidation with strong support at 25,500 and resistance near 25,900. A decisive break below 25,500 could trigger further downside toward the 25,200 level, while a breakout above 25,900 may push the index toward the 26,200 mark.
For the Sensex, key support is seen around 84,300, while resistance remains near 85,200. Short-term traders are advised to remain cautious and avoid aggressive positions until clear directional cues emerge.
Conclusion
The Indian market’s muted close reflects a mix of profit booking, global uncertainty, and sector-specific pressures. While banking stocks weighed heavily on the benchmarks, gains in IT and FMCG limited the downside. Experts believe that the market may continue to move sideways in the near term as investors assess the impact of global macro developments and await domestic earnings cues.
For long-term investors, however, analysts continue to see opportunities in select sectors like technology, infrastructure, and consumer goods. With India’s economic fundamentals remaining robust, any short-term correction could provide an opportunity for value accumulation ahead of the next leg of the market rally.
As the week progresses, all eyes will be on the RBI policy outcome, corporate earnings announcements, and global market trends to determine the next major move for the Indian equity market.