Weak Q2 earnings, inflation fears: Sensex, Nifty land in the red again

The Sensex and the Nifty 50 fell for the second consecutive session on Wednesday amid weak global cues. Unimpressive Q2 earnings and concerns over sticky inflation continued to weigh on market sentiment.

The Sensex fell 319 points, or 0.39 percent, to 81,501.36, while the Nifty 50 settled at 24,971.30, down 86 points, or 0.34 percent.

Shares of Infosys, Mahindra and Mahindra, ICICI Bank, ITC and Kotak Mahindra Bank ended as the top drags on the Sensex index.

The BSE Midcap index also slipped 0.10 percent. However, the BSE Smallcap index outperformed and ended with a gain of 0.31 per cent.

The overall market capitalisation (m-cap) of the firms listed on the BSE stood at nearly ₹463 lakh crore. In the previous session, the market m-cap stood at nearly ₹464 lakh crore. Thus, investors lost about ₹1 lakh crore in a day.

Even as the Sensex declined, 262 stocks including HCL Tech, Dixon Technologies, HDFC AMC, Oberoi Realty, Page Industries, and Siemens, hit their fresh 52-week highs in intraday trade on BSE.

Auto, IT shares  fall over 1% 

Most sectoral indices ended with losses on Wednesday, with Nifty Auto and IT falling 1.27 percent and 1.17 percent, respectively.

Nifty Media (down 0.48 percent), Pharma (down 0.38 percent), and FMCG (down 0.37 percent) declined up to half a percent.

Bank Nifty fell 0.20 percent, while the Private Bank index dropped 0.43 percent. The PSU Bank index ended flat.

Weak global cues, Q2 results

The Nifty 50 declined 0.60 percent in the last two sessions. Weak global cues and lacklustre September quarter earnings are keeping the sentiment low, even as the market's medium-to-long-term outlook remains positive.

Experts underscore that the market struggles to reach higher levels amid stretched valuation. Foreign capital outflow is another key factor weighing on market sentiment.

"The market traded range-bound with a negative bias due to the fear of a downgrade in the 2023-24 earnings, which could impact the sustainability of premium valuation. The participants expect only a slow pace in earnings expansion in Q2 of 2023-24 due to insipid demand and volatility in input prices. The rate of recovery in Q2 compared to Q1 is below expectation," said Vinod Nair of Geojit Financial Services.

"Markets were range-bound with a negative bias as investors mostly resorted to selective profit-taking, particularly in banking, IT and auto stocks. While weak global market cues also contributed to the overall weakness, persistent offloading of domestic shares by foreign investors this month have made local traders jittery and are mostly adopting a cautious approach," said Prashanth Tapse of Mehta Equities.

Top gainers and losers

As many as 34 stocks ended from the Nifty 50 index ended in the red. Shares of Trent, Mahindra and Mahindra (M&M), Infosys, and Hero MotoCorp emerged as the top losers in the Nifty 50 pack.

On the other hand, shares of HDFC Life, Dr Reddy's Labs, Grasim, and HDFC Bank ended as the top gainers in the index.

Nifty 50 technical view

"The Nifty 50 slipped after a brief consolidation on the hourly timeframe, suggesting increasing bearish sentiment among traders. The recent weakness has led the Nifty 50 below the 38.20 percent retracement of the previous rise from 24,694 to 25,212," said Rupak De of LKP Securities.

"Sentiment now appears slightly bearish, with immediate support at 24,900. A break below this level could intensify the weakness, potentially dragging the Nifty down to 24,700. On the upside, 25,000 remains a strong resistance; only a decisive breakout above this level may trigger a directional rally in the market," said Mr De.

(By arrangement with livemint.com)