Nifty logs longest losing streak since Feb 2023, Sensex swings 900 Points on IT & Energy sell-off

The market sentiment has turned cautious, shifting from a "buy the dip" approach to "sell on the rise," with the recent 10 percent decline from peak levels seen as a technical correction.

The Nifty marked its longest losing streak since February 2023, slipping for the seventh consecutive session amid a sharp sell-off in IT and energy stocks. The Sensex, too, had a turbulent day, swinging 900 points on the bourses. Investor sentiment remained dampened by concerns over the US Fed potentially slowing interest rate cuts, disappointing Q2 earnings, persistent foreign outflows, and stretched valuations, keeping the markets on edge.

At close, the Sensex was down 241.30 points or 0.31 percent at 77,339.01, and the Nifty was down 78.90 points or 0.34 percent at 23,453.80. About 1560 shares advanced, 2361 shares declined, and 124 shares unchanged.

"Whenever Nifty trades near the 200-day moving average, we usually see a small rebound and that's what investors witnessed today," Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said. The markets opened higher but quickly gave up all its early gains with the Sensex trading 922 points below its intraday peak but it bounced back quickly with buying emerging at lower levels. "Market participants need to wait for a couple of more days to judge if it's time for a decisive bounce back," Bathini said. "The intensity of foreign outflows seems to have come down and domestic institutions buying the dip are positives for the market," he added.

After today's fall, the market has corrected 12 percent from its peak. Even though there was some 'buy on dip' visible today, market sentiment remains cautious, said market analysts.

During the session, the broader market, represented by the midcap and smallcap indices, mirrored weak trends with losses of 0.2 and 0.7 percent, respectively. Although both indices have fallen over 12 percent from their peak, they remain up 17 percent year-to-date, outperforming the Nifty's 8 percent gain over the same period.

The biggest sectoral loser in today's trade was Nifty IT which slipped over 2 percent with all 10 constituents declining 2–4 percent. The drop comes after Jerome Powell said that there was no need to rush to lower interest rates. The tech index has surged 16 percent year-to-date. Stocks like TCS, Infosys, and Wipro dragged the index lower.

Other sectoral laggards included Nifty Healthcare, Pharma and Energy which slipped up to 1 percent.

On the winning side, Nifty Metal was the brightest spark in trade today, rising over 2 percent on China's move to reduce/cancel export tax rebates for select products made of aluminium and copper. Nifty Realty also performed well, rising almost 1 percent. Auto stocks edged higher largely helped by Hero MotoCorp, Maruti Suzuki, Bajaj Auto, and TVS Motor.

The most notable gainer today was Hero MotoCorp which closed 3 percent higher on the back of robust guidance and brokerages dishing out bullish calls on the stock. The company suggests that it will outpace the industry on improving demand and a host of new product launches.

Stocks that got slaughtered in today's trade were city gas distribution companies (CGDs), mainly IGL and MGL which crashed 20 percent after the government cut the Administered Price Mechanism (APM) allocation to CGD players by 20 percent for the second month in a row. A reduced allocation in the APM means that the Centre has cut the supply of low-priced natural gas from old fields to city gas retailers.

The outlook for overall market sentiment continues to be cautious. If Nifty rises above 23,733-23,788, it could go up to 24,111, according to Anand James of Geojit Financial Services. Any quick recoveries may face resistance. On the downside, the market is unlikely to fall below 22,800, he added.

Hindalco, Hero MotoCorp, Tata Steel, HUL, and M&M were the top gainers on the Nifty. TCS, BPCL, Trent, Infosys, and Dr Reddy's were the major laggards on the Nifty.