Nifty, Sensex snap 7-day rally amid expiry-driven volatility, FMCG stocks drag markets

Pharma stocks outperformed, while FMCG stocks underperformed.

After rallying almost 2,000 points over the past seven sessions, the Nifty 50 index took a breather in trade on April 24. The Sensex index also capped its winning streak, with consumer staples stocks leading the losses over the session. Further, volatility is likely to be higher during trade given the April series expiry.

At 12:01 pm, the Sensex was down 263.54 points or 0.33 percent at 79,852.95, and the Nifty was down 72.60 points or 0.30 percent at 24,256.35. About 1956 shares advanced, 1350 shares declined, and 111 shares unchanged.

The FMCG index was the top sectoral laggard, sinking almost one percent as a result of weak earnings shows from index heavyweights such as Hindustan Unilever Ltd., Nestle India, and Tata Consumer Products. On the flip side, the Nifty Pharma index soared 1.3 percent, with Natco Pharma, Divi's Lab, and Ajanta Pharma jumping up to 12 percent.

The broader markets outshone their large-cap peers. The Nifty Midcap 100 index eked out minor gains of around 0.03 percent, while the Nifty Smallcap 100 advanced half a percent.

Fear and uncertainty in the market, as indicated by the India VIX gauge, ticked upwards by three percent to 16.43.

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International brokerage UBS upgraded its rating on India to 'neutral' from its 'underweight' stance in its Emerging Markets and Asia-Pacific equity strategy note. However, it finds better risk-reward opportunities in China within the pack.

Despite India checking multiple strategic boxes - such as low external dependence, resilience in earnings even during global slowdowns, and potential support from lower oil prices - UBS believes the investment case for India has softened in the near term.

Volatility is likely to be high on the monthly expiry session, as traders roll over April F&O positions.

"Foreign investors have pivoted to net buyers in cash markets (Rs 21,000 crore net buying since April 7th lows) while gradually covering their short positions in index futures (though still maintaining 67 percent net short positions). This shift indicates that markets will find buying support at lower levels during pullbacks," said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Going ahead, experts believe that the stretched valuations (Nifty is trading above 20 times estimated FY 26 earnings) will constrain the rally. "In the very short run, the market may respond to the results flowing in. However, going forward, the market will be concerned about the timing, nature and magnitude of India’s response to the terror attacks and its consequences. Therefore, investors have to be cautious even while remaining invested," said  VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

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