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The Indian stock market experienced a downturn on October 17, with benchmark indices Nifty and Sensex extending their morning losses. The decline was largely attributed to a significant drop in auto and realty stocks, which heavily impacted market sentiment. This downturn occurred despite a positive performance from the IT index, driven by upcoming Q2 earnings releases from major players Infosys and Wipro.
At midday, the Sensex had decreased by 444.09 points, representing a 0.54 percent drop, settling at 81,057.27. The Nifty experienced a more pronounced decline, falling by 183.10 points, or 0.73 percent, to reach 24,788.20. Market activity showed a greater number of declining shares (2236) compared to advancing shares (1065), with 93 remaining unchanged.
The broader market, particularly the mid and smallcap indices, significantly underperformed the benchmarks, each experiencing a decline of over 1 percent. Market experts expressed caution regarding the mid and smallcap space, citing elevated valuations, especially in light of their strong performance year-to-date. The India VIX, a measure of market anxiety, rose by 3 percent, exceeding the 13 level, indicating heightened uncertainty.
Across sectors, only the IT index remained in the green, registering an almost 1 percent increase. Gains in key IT players like Infosys, Tech Mahindra, TCS, and Wipro contributed to the sector's positive performance. However, all other sectors experienced declines, with the Auto and Realty indices bearing the brunt of the losses.
Bajaj Auto, a major two-wheeler manufacturer, saw its shares plummet by over 11 percent after its Q2 earnings fell short of investor expectations. The company also revised its growth outlook for two-wheeler sales in India downward to a modest 5 percent, at the lower end of its previous estimate of 5-8 percent. Realty majors such as DLF and Prestige Real Estates also weighed heavily on the Realty index, contributing to its overall decline.
Market analysts provided insights into the current market dynamics. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the Nifty's consolidation around the 25000 level is likely to continue, influenced by foreign institutional investor (FII) selling and domestic institutional investor (DII) buying. He expressed concern about the resurgence of smallcap outperformance driven by liquidity. Vijayakumar anticipates stock-specific activity driven by Q2 results, with a positive response expected to the results of financials and recommending buying IT stocks on dips.
From a technical standpoint, Anand James, Chief Market Strategist at Geojit Financial Services, observed that two consecutive days of declines raised questions about the recovery moves initiated since October 8. However, he indicated that oscillator signals that supported the initial recovery moves persist, encouraging a continued play towards 25,390. The support provided at 24,900 the previous day has resulted in a parallel consolidation pattern, setting the stage for an upswing. James emphasized maintaining a close eye on the downside marker in the 24,900-830 region.
Among key Sensex gainers were Infosys, Tech Mahindra, and SBI. Key losers included M&M, Maruti Suzuki, and Axis Bank. The Nifty also saw Infosys, Hindalco, and Tech Mahindra as top performers, while Bajaj Auto, Hero MotoCorp, and M&M were the major laggards. Kolte-Patil Developers, a real estate developer, witnessed a significant 14 percent surge in its share price on October 17, driven by positive investor response to the company's solid Q2 business update, which included its highest-ever quarterly revenue.
Source: Mid-day Mood | Nifty, Sensex trade lower as auto, realty stocks bleed; IT bucks trend