Benchmark stock markets continued their downward trend on Thursday as investors opted to take profits amidst a cautious global environment and renewed uncertainties about the US Federal Reserve’s monetary policy direction. The S&P BSE Sensex concluded the day 465.75 points lower at 83,938.71, while the NSE Nifty50 dropped 155.75 points to 25,722.10. Most sectoral indices closed in negative territory, reflecting broad-based selling pressure.
HDFC Bank and ICICI Bank, major market players, were among the primary contributors to the decline, influenced by SEBI’s recent circular on the implementation of eligibility criteria for market participants.
The overall market sentiment mirrored the benchmark indices’ weakness, as global indicators turned risk-averse post the Fed’s suggestion that a rate cut in December was not guaranteed. The strengthening US dollar and expectations of prolonged tight monetary policies led to renewed selling by foreign institutional investors (FIIs).
Vinod Nair, Geojit Financial Services’ Head of Research, highlighted that the market sentiment was a mix of profit-taking and macroeconomic caution. He noted that Indian equities ended lower due to profit-booking, mixed corporate earnings, and global cautiousness amidst a strong US dollar. The majority of sectors closed negatively, impacted by renewed FII selling following Powell’s hawkish remarks and unsatisfactory US-China trade developments.
Nair mentioned that PSU banks performed well due to anticipated higher FDI limits and improved Q2 results. Despite recent gains, markets are currently witnessing profit-taking as much of the economic news has already been factored in. The strategy of “Buy on dips” is likely to prevail in the short term, supported by solid underlying optimism on a quarterly basis.
Market breadth indicated short-term consolidation, while traders are expected to monitor global yields, FII flows, and upcoming Q2 earnings reports to assess market direction.