Profit-Taking and Geopolitical Concerns Pull Back Indices for a Second Consecutive Session
Market Overview
– Indian equities experienced a decline for the second straight session as profit-taking weighed on investor sentiment.
– Technical indicators indicated that the market was approaching overbought territory, prompting caution among traders.
– Geopolitical tensions and a decrease in major index heavyweights also contributed to the market’s downward trend.
– Analysts anticipate this downturn to be a short-lived pause in the current market rally, which they believe will ultimately be supported by strong Q3 earnings and a government focus on capital expenditure (capex).
Key Market Statistics
– NSE Nifty: Down 71.6 points (0.3%) to close at 26,178.7.
– BSE Sensex: Dropped 376.3 points (0.4%) to settle at 85,063.34.
– Both indices had reached fresh intraday highs on Monday before succumbing to selling pressure.
Insights from Analysts
– Bhavya Shah, a technical research analyst at Stoxbox, noted that while the Nifty remains in a robust uptrend, recent price movements indicate a necessary mean reversion.
– He pointed out that momentum oscillators are cooling from overbought conditions, suggesting a consolidation period.
– Immediate support levels for the Nifty are identified at 26,050 and 25,880, with resistance at 26,325 and 26,500.
– Shah emphasized that a decisive close above 26,325 with volume support is essential for sustained upward movement; otherwise, the index may remain range-bound.
Sector Performance
– The Nifty Pharma and Healthcare indices emerged as top gainers, each rising by 1.7-1.8%.
– Conversely, the decline was primarily led by heavyweights Reliance Industries and HDFC Bank:
– Reliance fell 4.4%.
– HDFC Bank slipped 1.5%.
Sunny Agrawal, head of fundamental research at SBI Securities, expressed optimism about the outlook for earnings growth. He highlighted several key drivers:
– Expected acceleration in earnings growth to double digits for the upcoming December quarter results.
– Anticipation of a government focus on capex-driven growth strategies in the next Union Budget.
– Relatively stable valuations and a reduction in selling intensity from foreign institutional investors (FIIs) amid a more stable dollar.
Broader Market Trends
– The broader market also softened, with the Nifty Midcap 150 down 0.2% and the Nifty Smallcap 250 lower by 0.3%.
– Among the 4,349 stocks traded on BSE, 1,575 advanced while 2,606 declined by the session’s end.
Conclusion
As profit-taking and geopolitical uncertainties continue to influence market dynamics, analysts believe that this decline may merely represent a temporary setback in an ongoing rally. With anticipated growth in Q3 earnings and a supportive government strategy in focus, investors remain cautiously optimistic about future market performance.