Rollercoaster session for markets: Sensex, Nifty fall amid volatility; PSU banks, pharma worst hit

Shriram Finance, IndusInd Bank, BEL, NTPC, and Adani Enterprises were the major laggards on the index.

Following a brief spell in the positive, benchmark indices Nifty and Sensex erased gains to end in the red after a sharp fall in PSU banks, realty, and pharma stocks jolted investors. The scenario was much worse in the broader market as the small-midcap stocks plunged over 2 percent.

IT stocks, the only saving grace in a weak market, couldn't help the index higher. This comes after TCS recorded better-than-expected quarterly earnings, signalling early signs of a discretionary demand revival and subsequent rise in margins from FY26.

At close,  the Sensex was down 241.30 points or 0.31 percent at 77,378.91, and the Nifty was down 95.00 points or 0.40 percent at 23,431.50. About 711 shares advanced, 2,890 shares declined, and 70 shares unchanged.

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"The IT sector, led by TCS, provided much-needed support to the market today amid high volatility and a broad-based sell-off. While TCS's earnings were decent, the real highlight was its commentary, particularly on the deal pipeline and discretionary spending, which boosted sentiment across large IT names," Aishvarya Dadheech, Founder and CIO of Fident Asset Management said in an interaction with Moneycontrol.

He added that volatility is expected to persist for the next three to four weeks, driven by global events like US payroll data and the upcoming Union Budget. Dadheech noted that if earnings disappoint, particularly in mid and small-cap segments, selling pressure could intensify. However, attractive valuations may trigger a quick reversal if earnings are supportive.

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The broader market, represented by the mid-small cap indices, plunged in the red with losses of 2 and 2.6 percent, respectively. The focus now shifts to the broader earnings season, particularly mid- and small-cap companies.  The broader market took centre stage in 2024, with the Nifty Midcap and Smallcap indices delivering impressive gains of over 20 percent each, outpacing Nifty's 9 percent gain during the same period.

The Nifty IT index, surging over 3 percent, single-handedly drove the markets higher as optimism from TCS' strong earnings buoyed sentiment across the sector. However, other sectors struggled, with the Pharma, PSU Bank and Realty indices falling a staggering 2.5 percent each. Public sector banks extended their losing streak to a fourth session, weighed down by lacklustre Q3 business updates that fell short of optimistic expectations. Nifty Metal, Infra, Bank and Auto all plunged 1.5 percent each.

"The overall outlook remains tilted towards a bearish trend, and traders are advised to utilize any intermediate rebounds as opportunities to short the index. During the earnings season, stock-specific movements will be influenced by result expectations. Participants should align their strategies accordingly, prioritizing relatively strong sectors or themes for long trades and targeting underperforming segments for short positions," Ajit Mishra, Senior Vice President at Religare Broking said.

Read more: FMCG companies may finally be turning the corner

TCS was the brightest spark in trade today, up a massive 5.6 percent following its Q3 earnings report. The company reported its highest third-quarter order book in five years, with a total contract value (TCV) of $10.2 billion. Drawing optimism, CLSA upgraded the stock to 'outperform' and raised its price target to Rs 4,546, citing improved demand commentary and a sharp uptick in the order book. CLSA also highlighted artificial intelligence (AI) as a growth driver for TCS in the future.

Shares of Adani Wilmar extended their losing streak for the third consecutive day, falling 10 percent on January 10, as promoter Adani Commodities launched a two-day offer-for-sale (OFS) for non-retail investors. The sale for retail investors is set to begin on January 13. Adani Commodities plans to sell 17 crore shares in Adani Wilmar, which accounts for 13.5 percent of the company’s total issued and paid-up equity share capital.

Shares of IRCTC gained as much as 5 percent, snapping its two-day losing streak on the bourses, after international brokerage Macquarie initiated coverage with an 'outperform' rating and assigned a target price of Rs 900. Macquarie said that IRCTC's unparalleled monopoly in Indian Railways’ e-ticketing and catering services remains its standout strength, positioning it as a leader of the country’s railway modernization journey.

Tata Elxsi shares dropped 7 percent on January 10 after the company reported disappointing results for the October-December quarter (Q3FY25), missing Street estimates. As a result, analysts at Morgan Stanley have downgraded the stock to an "underweight" rating and reduced their target price to Rs 6,000 per share from Rs 6,500.

"Nifty can find support at 23,400 followed by 23,300 and 23,200. On the higher side, 23,600 can be an immediate resistance, followed by 23,700 and 23,800," Hardik Matalia, Derivative Analyst at Choice Broking, said. "The charts of Bank Nifty indicate that it may get support at 49,200 followed by 48,900 and 48,500. If the index advances further, 49,800 would be the initial key resistance, followed by 50,000 and 50,300," he added.

TCS, Tech Mahindra, Wipro, Infosys, and HCL Tech were the major gainers on the Nifty. Shriram Finance, IndusInd Bank, BEL, NTPC, and Adani Enterprises were the major laggards on the index.

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