The Indian stock markets witnessed a relatively quiet session today, with both the Nifty 50 and Sensex ending the day on a lower note due to late-session selling pressure. While early gains in IT stocks pushed the indices upward, the momentum was quickly reversed by a sharp decline in financial stocks, leaving the markets to close in negative territory.
The Nifty 50 ended the session down by 0.15%, closing at 24,436 points, and the Sensex fell by 0.16%, settling at ₹80,090 points. Out of the Nifty 50’s constituents, 32 stocks closed in the red, with Mahindra & Mahindra leading the decline, dropping by 3.2%.
Other major laggards included Sun Pharmaceutical, Eicher Motors, Shriram Finance, Power Grid Corporation, Larsen & Toubro, Adani Ports & SEZ, NTPC, and Cipla, all of which fell by more than 1.5%.
This pattern of investors selling at every opportunity for profit has been prevalent in recent trading sessions. Several factors are contributing to the subdued sentiment in the markets, including high valuations, lacklustre earnings for the quarter ending in September, continued selling by foreign portfolio investors (FPIs), geopolitical tensions in the Middle East, and concerns surrounding the upcoming U.S. elections.
Companies that have underperformed in their earnings reports are seeing sharp selloffs in their stock prices, while those that exceeded expectations are touching fresh record highs.
Despite the struggles faced by large-cap stocks, there was some optimism in the broader markets today. Both the mid-cap and small-cap indices rebounded after a previous day’s decline. The Nifty Midcap 100 gained 0.64%, closing at 56,533 points, while the Nifty Smallcap 100 surged by 1.24%, ending at 18,285 points.
Vinod Nair, Head of Research at Geojit Financial Services, commented on today’s market performance, noting that investor sentiment has turned gloomy due to tepid earnings and foreign investor sell-offs.
He pointed out that mid and small-cap stocks have benefited from bargain hunting following the recent selloff, though the sustainability of this momentum remains uncertain.
Nair also remarked on the rising U.S. 10-year bond yield, which signals that the U.S. Federal Reserve may slow down its pace of rate cuts, causing a more cautious outlook for emerging markets like India.
In terms of sectoral performance, the Nifty IT index was a standout performer today, registering a solid recovery with a gain of 2.38%. This was driven by impressive earnings reports from companies like Coforge and Persistent Systems, both of which surged over 10% and hit new highs during the session. The Nifty PSU Bank, Nifty Media, and Nifty FMCG indices also posted modest gains of up to 0.15%.
On the other hand, the Pharma sector continued to face difficulties, with the Nifty Pharma index declining by 1.56%, marking its third consecutive day of losses. The index fell to a two-month low, while the Nifty Auto index also extended its losing streak, dropping 0.71% to a near three-month low.
In a significant development, Goldman Sachs Group downgraded its rating for Indian equities to 'neutral' from 'overweight,' citing concerns about slowing economic growth and its impact on corporate earnings.
This comes after a period of optimism from the group, which had raised Indian stocks to 'overweight' late last year due to strong earnings growth despite global economic challenges.
Goldman Sachs analysts expressed caution over the current high valuations in the Indian markets and noted that a less supportive macroeconomic environment could limit the near-term upside for local stocks.
As a result, they lowered their 12-month target for the Nifty 50 index to 27,000 from their previous target of 27,500, which implies a potential 10% upside from yesterday's closing level.
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