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The Indian equity market experienced a day of fluctuating fortunes, ultimately settling in muted territory after recovering from significant early losses. Both the Sensex and the Nifty initially plunged due to negative global cues stemming from a downward revision of the US GDP forecast by Goldman Sachs. This revision, from 2.4% to 1.7%, signaled a potentially weaker economic outlook for the United States, triggering a broad-based selloff across global and Asian markets. The Sensex opened with a substantial 370-point gap down, reflecting the immediate impact of this negative sentiment. However, the index demonstrated resilience, staging a steady recovery throughout the trading session, driven by selective buying in heavyweight stocks. Despite this recovery, the Sensex ultimately closed down by a marginal 12.85 points, settling at 74,102.32. Similarly, the Nifty also faced significant intraday losses, dropping by over 140 points in the initial market reaction. However, mirroring the Sensex's performance, the Nifty managed to erase these losses and close with a gain of 37.60 points, finishing the day at 22,497.90. The recovery, while significant, was not strong enough to completely offset the initial negative impact, highlighting the underlying caution prevailing among investors.
The initial market downturn was primarily attributed to the ripple effects of the revised US GDP forecast and the subsequent negative sentiment in global markets. As Prashanth Tapse, Senior VP (Research) at Mehta Equities, noted, “Weakness in Asian and US market indices kept the mood cautious while strong foreign fund outflows, coupled with volatile currency movements and global economic uncertainty, continue to make investors risk-averse.” This statement encapsulates the key factors contributing to the market's cautious stance. The combination of negative global cues, persistent foreign fund outflows, fluctuations in currency values, and overarching global economic uncertainty created an environment where investors were hesitant to take on significant risk. The sector-specific performance further illustrated the nuanced dynamics at play. While some sectors, such as realty, telecom, oil & gas, energy, and metal, experienced notable gains, rising by up to 3.92%, others faced significant losses. The IT, banking, and auto sectors were particularly affected, indicating a shift in investor preferences and concerns about the future prospects of these industries. The rising concerns over US growth specifically triggered a selloff in IT counters, reflecting the sector's sensitivity to economic conditions in key markets.
The broader market performance presented a mixed picture, with divergence observed between the mid-cap and small-cap segments. The BSE Midcap index managed to rise by 0.72%, suggesting some positive momentum in this segment. However, the small-cap index declined by 0.70%, indicating that smaller companies faced greater challenges in navigating the prevailing market conditions. This divergence highlights the varying levels of investor confidence and risk appetite across different segments of the market. The overall market breadth was negative, with a higher number of losers compared to gainers on the BSE. Specifically, there were 2,629 losing stocks compared to 1,354 gaining stocks, further underscoring the prevailing bearish sentiment in the broader market. Despite the overall negative market breadth, investor wealth saw a marginal increase of Rs 39,722 crore, bringing the total market capitalization to Rs 394.25 lakh crore. This increase suggests that while many stocks experienced losses, the gains in certain heavyweight stocks were sufficient to offset these losses and contribute to a slight overall increase in market capitalization.
The performance of individual stocks within the Sensex pack provided further insights into the market's dynamics. IndusInd Bank emerged as the top Sensex laggard, experiencing a significant plunge of 27.2% in its share price. This sharp decline was triggered by the discovery of accounting discrepancies in its derivatives portfolio, which eroded over Rs 19,000 crore from its market capitalization in a single day. The stock price fell from Rs 900.60 on Monday to a 52-week low of Rs 649, highlighting the severity of the impact. Other major losers included Infosys, Bajaj Finserv, M&M, and Zomato, reflecting the broader selloff in certain sectors and stocks. Conversely, Sun Pharma, ICICI Bank, Bharti Airtel, HCL Tech, and Maruti Suzuki were among the top gainers in the Sensex pack, demonstrating that some companies were able to buck the trend and deliver positive performance. These gains may have been driven by company-specific factors, positive news flow, or investor confidence in their long-term prospects. Ajit Mishra, SVP – Research at Religare Broking, provided a forward-looking perspective, stating, “Looking ahead, global cues, particularly from the US, may continue to cause volatility. On the technical front, a decisive breakout from the 22,250-22,650 range could set the next directional move for the Nifty; otherwise, the sideways trend may persist.” This suggests that the market's future direction will likely be heavily influenced by global economic developments, particularly in the United States, and that a clear breakout from the specified technical range is needed to establish a more definitive trend.