Nifty, Sensex extend opening losses; all sectors in red, heavyweights under pressure

Maruti Suzuki, Grasim Industries, Eicher Motors, Adani Ports and ONGC were among major gainers on the Nifty, while losers were M&M, SBI, Kotak Mahindra Bank, HDFC Bank and IndusInd Bank.

The Nifty 50 and the 30-stock Sensex extended their opening losses on July 10, with both the benchmarks falling close to 1 percent in the early hours of trade. Caution ahead of the release of India as well as US inflation print and the onset of the Q1 FY25 earnings season triggered a bout of profit booking in the market.

Several index heavyweights, including Reliance Industries, ICICI Bank, Tata Consultancy Services and Tata Motors were under pressure, which pulled the benchmarks further down. At 11.06 am, the Sensex was down 713.33 points or 0.89 percent at 79,638.31, and the Nifty was down 210.90 points or 0.86 percent at 24,222.30.

All sectors floated in losses, with PSU and gas stocks taking a significant hit. Auto, information technology and metals were the worst hit among sectoral indices. The broader market also struggled, with smallcaps and midcaps both dropping nearly one percent.

Some caution also spread due to concerns about Securities and Exchanges Board of India (SEBI's) efforts to rein in the rising frenzy in the F&O segment. This comes after a SEBI working group proposed raising the lot size of derivative contracts to Rs 20-30 lakh from the current Rs 5 lakh and limiting weekly options to one expiry per stock exchange per week, in order to increase entry barriers to the segment.

Veteran investor Vijay Kedia also supported SEBI's concerns over the heightened popularity of derivatives contracts. "Option is the new buzz word and every one among GenZ is talking about it," Kedia said. Not just the options side of the stock market, even the cash segment seems to be in the grip of this frenzy, he added.

Despite other concerns, analysts expect the underlying market momentum to remain positive and take cues from upcoming inflation data, Q1FY25 earnings, and budget.

Over the next few days, the pharma sector will likely remain focused on back comfortable valuation and expectation of healthy earning growth in Q1. Traders are advised to adopt a "buy on dips" strategy and focus on sectors/themes in line with the current market trend, said Ajit Mishra – SVP, Research, Religare Broking.

Federal Reserve Chairman Jerome Powell insists that a rate cut is inappropriate until there is greater confidence that inflation is moving sustainably toward 2 percent.

Amid this backdrop, bullish investors are revising their Nifty targets higher to 26,000, and attention is now on the US CPI data due on July 11, said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

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Defensive sectors like FMCG and Pharma have been favoured in recent sessions, and Auto stocks have also shown strength. Traders should focus on these areas for better momentum and risk-reward compared to the main indices, said Rajesh Bhosale, Equity Technical Analyst, Angel One.

The underlying trend of Nifty continues to be positive. "Having moved above the key overhead resistance of 24,400 levels, the Nifty could now advance towards another important resistance of 24,960 levels in the near term. Immediate support is at 24,250 levels," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

"Bank Nifty witnessed a consolidation. It is trading around the lower boundary (52,000) of the broad range 52,000 – 53,500 and hence likely that the Bank Nifty can witness positive momentum towards 53,000 from a short-term perspective," said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas, for your reference.