Indian Equity Markets Decline Amid Weak Global Cues and Sector-Specific Pressure

Indian equity markets experienced a downward trend in early trading on Thursday, influenced by weak global cues. The technology, financials, metals, and consumer goods sectors were the primary contributors to the decline. The 30-share BSE Sensex dropped 60 points or 0.09 percent, trading at 65,386, while the broader NSE Nifty fell 14 points or 0.07 percent, trading at 19,385. However, mid- and small-cap shares demonstrated positive performance, with Nifty Midcap 100 rising 0.49 percent and small-cap gaining 0.52 percent.

Asian markets also experienced a decline, following Wall Street’s negative performance. The fall in US equities was attributed to the release of minutes from the June US Federal Reserve meeting, which revealed a unanimous decision to pause rate hikes, with most members expecting further policy tightening.

In terms of investor activity, foreign institutional investors (FIIs) purchased Rs 1,603 crore of Indian equities on a net basis, while domestic investors sold Rs 439 crore of shares, according to provisional NSE data.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, advised investors to avoid investing in low-grade small-cap stocks at this time and instead stay invested in high-quality large-cap stocks. He suggested waiting for the Q1 results to determine the market’s direction.

Among the sector gauges compiled by the National Stock Exchange, eight out of fifteen were trading in the red. Nifty IT, Nifty Financial Services, Nifty Metal, and Nifty FMCG underperformed, declining by 0.36 percent, 0.20 percent, 0.19 percent, and 0.13 percent, respectively.

Regarding individual stocks, Eicher Motors experienced the most significant loss in the Nifty pack, with the stock falling 2.55 percent to Rs 3,225.25. Other stocks such as IndusInd Bank, Tata Steel, HCL Tech, and Divi’s Labs also declined, with losses ranging up to 1.35 percent.  The top gainers were Apollo Hospitals, Britannia, Reliance Industries, Nestle India, and PowerGrid.

The overall market breadth showed a positive trend, with 1,964 shares advancing and 957 declining on the BSE.

Among the constituents of the 30-share BSE index, HDFC twins (HDFC and HDFC Bank), Infosys, Bajaj Finance, and ITC performed poorly. On the other hand, Suzlon Energy, Angel One, Jindal Steel, India Cements, and Cyient experienced declines of up to 3.32 percent, while Olectra Greentech and Jamna Auto Industries witnessed gains of up to 7.35 percent.

In the previous trading session, the Sensex slipped 33 points or 0.05 percent to settle at 65,446.04, while the Nifty added 10 points or 0.05 percent, closing at a new peak of 19,399.

Looking at the Nifty outlook, Anand James, Chief Market Strategist at Geojit Financial Services, suggested that while several downside attempts occurred as expected, they lacked the required momentum to reach the objective of 19,125. The subsequent pullback led to a neutral bias for the day, but James leaned towards the downside prospects indicated by the spinning top formation from the previous day. He noted that this view would be invalidated if the 19,320-19,250 region held in the event of a decline or if 19,479 was breached during upside attempts. In the derivatives market, Nifty weekly contracts showed the highest open interest at 19,500 for calls and 19,300 for puts, while monthly contracts had the highest open interest at 19,500 for calls and 19,000 for puts. An increase in future index long positions holdings by FIIs was observed, along with an increase in future index shorts and index options.