The Sensex and Nifty declined sharply in early trade on Wednesday, pressured by falling bank stocks and weak trends in Asian markets. Analysts remain cautiously optimistic about potential support from Domestic Institutional Investors.
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- Sensex down 366.53 points, Nifty drops 129.25 points in early trade.
- Bank stocks are major contributors to the decline.
- Cautious optimism as FII selling appears to taper off.
In early trade on Wednesday, the benchmark equity indices, Sensex and Nifty, experienced a notable decline, pressured by falling bank stocks and weak trends in Asian markets. The BSE Sensex dropped by 366.53 points, landing at 80,002.50, while the NSE Nifty fell by 129.25 points to 24,337.60.
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Among the 30 stocks that constitute the Sensex, notable laggards included Sun Pharma, ICICI Bank, Axis Bank, Bajaj Finserv, Kotak Mahindra Bank, State Bank of India, HCL Technologies, and Bharti Airtel. These stocks faced significant selling pressure as investors reacted to the prevailing market conditions. In contrast, a few stocks managed to defy the overall trend, with Maruti, Tata Motors, IndusInd Bank, and Larsen & Toubro recording gains amid the broader market decline.
Foreign Institutional Investors (FIIs) were reported to be net sellers in the capital markets on Tuesday, offloading shares worth ₹548.69 crore, according to exchange data. Despite this, analysts remain cautiously optimistic about the market's near-term prospects. “In the near term, the market will be influenced by two factors—one positive and the other negative. The positive is the sharp decline in FII selling to just ₹548 crore on Tuesday, suggesting that the FII tactic of ‘Sell India, Buy China’ may be tapering off,” explained V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
He further noted that increased participation from Domestic Institutional Investors (DIIs) and retail investors, coupled with the tapering off of FII selling, might provide a near-term boost to the markets, especially with the festive season approaching. However, Vijayakumar cautioned that the upward trend might not be sustainable as the Q2 earnings numbers indicate potential softness in earnings for FY25.
In broader Asian markets, Seoul, Shanghai, and Hong Kong saw declines, while Tokyo was in positive territory. The US markets concluded on a mixed note on Tuesday. Additionally, global oil benchmark Brent crude rose by 0.48% to $71.46 per barrel. On the previous day, the BSE benchmark had gained 363.99 points, or 0.45%, settling at 80,369.03, with the Nifty up by 127.70 points, or 0.52%, at 24,466.85.
(With inputs from PTI)
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