Indian market extends losses for 7th day, IT sector drags indices down

The Indian benchmark indices closed in the red yet again on Monday, November 18, extending their losing streak to the seventh consecutive session. This marks the longest losing streak since February 2023, as the bears appear to have a firm grip on the market, leaving little room for the bulls to make a move.

Both the Nifty 50 and Sensex experienced another volatile session, with sharp selling in the IT and metals sectors. The weakness in heavyweight stocks such as Reliance Industries and ICICI Bank further intensified the pressure on the indices, causing them to close at levels not seen since late June.

While HDFC Bank and auto stocks provided some support, it was insufficient to reverse the prevailing bearish trend. Nonetheless, their contribution helped the indices recover from their intraday lows. Consequently, the Nifty 50 closed the session with a decline of 0.34%, settling at 23,453 points. The S&P BSE Sensex closed 110 points, or 0.33%, lower at 77,327.

The broader market showed a mixed picture, with the Nifty Midcap 100 ending the session flat at 54,044, while the Nifty Small Cap index fell by 0.53% to 17,507 points.

Among the sectoral indices, the Nifty IT index saw a sharp sell-off, falling 2.36%, as traders lowered their expectations of a Federal Reserve interest rate cut in December, following rising inflation and stronger-than-expected US retail sales data.
This was followed by the Nifty Oil & Gas index, which dropped 1.53%, while the Nifty Media, Nifty Pharma, Nifty Energy, and Nifty CPSE indices all declined by over 1%.

On the positive side, the Nifty Metal index gained 1.90%, driven by strong performances from aluminium and copper manufacturers such as National Aluminium Company (NALCO), Hindalco Industries, and Vedanta, propelled by China's finance ministry's recent proposal to reduce or cancel export tax rebates for commodities, including copper and aluminium, effective December 1.

Other indices such as Nifty FMCG, Nifty Auto, Nifty PSU Bank, Nifty Realty, and Nifty Consumer Durables all ended the session with gains ranging from 0.27% to 1.05%.

29 Nifty 50 stocks close in the red

A total of 29 Nifty 50 stocks ended today's session in the red, with the IT sector emerging as the biggest loser. Shares of TCS, Infosys, Britannia Industries, and Nestle India Wipro between 2.4% and 3.1%. This was followed by BPCL, Dr. Reddy's Laboratories, Trent, Cipla Apollo Hospitals and eight other stocks, which closed with declines of over 1%.

On the winning side, Hindalco Industries stood as the top gainer with a gain of 3.8%, followed by Hero MotoCorp, which rallied 2.8% after the company's Q2 numbers came above the street estimates. Other stocks including Tata Steel, Mahindra & Mahindra, HUL, Nestle India, SBI and 3 other stocks ended the trade with gains over 1%.

Experts say

Commenting on today's market performance, Vinod Nair, Head of Research, Geojit Financial Services said, "Consolidation continued in the market; a slowdown in earnings growth and a weak rupee due to inflation impacted the sentiment. IT stocks reacted negatively today due to a reduced expectation of a FED rate cut in December, which may pose a delay in spending in the BFSI segment. On the other hand, metal stocks gained some ground after China decided to reduce tax rebates on aluminium and copper."

Prashanth Tapse, Senior VP (Research), Mehta Equities said, “Bearish sentiment continued to prevail as markets ended the choppy session on a weaker note for the 7th consecutive session led by weakness in IT, oil & gas, and telecom stocks. However, optimism in banking, metals, auto, and FMCG stocks helped benchmark indices come off their early lows. While Indian equity markets have been seeing fund outflows for more than a month now, surging US bond yields and local earnings failing to meet the estimates have been causing uncertainty amongst the investors.”

Rupak De, Senior Technical Analyst, LKP Securities said, " Nifty exhibited some volatility during the day, slipping near a historical congestion level on the daily timeframe. On the daily chart, the index has been trading below the 200-day moving average (DMA) for the past two sessions."

"The RSI has entered the oversold zone, accompanied by a bearish crossover. While the overall chart setup remains weak, the selling pressure appears to have eased following a prolonged correction. In the short term, the index may recover towards 23,700–23,800. On the downside, support is positioned at 23,200–23,300," he added.

(By arrangement with Livemint.com)