Sensex and Nifty extended losses for second day on Friday to fall 0.8 percent, dragged down by broad-based sector losses and geopolitical tensions along the India-Pakistan Line of Control (LoC) after the deadly terror attack in Kashmir that killed 26 people.
The equity benchmark indices Sensex and Nifty opened with gains in early trade on April 25 amid continuous foreign fund inflows and a rally in global markets, but failed to carry forward the winning momentum and got dragged lower, led by Axis Bank.
The 30-share BSE benchmark gauge climbed 329.23 points to 80,130.66 in early trade. The NSE Nifty rallied 118.75 points to 24,365.45. However, later both the benchmark indices gave up early gains and were trading much lower. At one point, Sensex was down nearly 1,200 points and Nifty went below 23,850. However, later the indices posted a minor recovery.
At 13:38 pm, the Sensex was down 480.93 points or 0.6 percent at 79,320.50, and the Nifty was down 168.65 points or 0.7 percent at 24,078.05. About 492 shares advanced, 2,918 shares declined, and 93 shares unchanged. Nifty, thus, reclaimed its 200-DMA level of 24,052.
Axis Bank, Adani Enterprises, Adani Ports and Special Economic Zone, Jio Financial Services and Trent led losses, falling up to 6 percent intraday.
Here are key possible factors behind the market decline today
1) Rising geopolitical tensions: Markets remained jittery amid rising tensions along the Line of Control (LoC) following reports of retaliatory action by the Indian Army against Pakistani firing on Indian posts in Jammu and Kashmir on Thursday night.
The developments came just days after the deadly terror attack in Kashmir’s Pahalgam on April 22, which left 26 people dead, mostly tourists.
Traders said signs of further escalation, including New Delhi's decision to suspend the Indus Water Treaty and downgrade diplomatic ties, are likely to weigh on market confidence in the near term.
2) Sluggish Q4 earnings: Fourth-quarter earnings reports indicate that a sustained recovery in earnings growth remains uncertain. A review of financial statements shows a deceleration in operating profit growth for the quarter ended March 31, primarily due to sluggish sales and subdued demand.
An analysis by Moneycontrol of 111 companies (excluding energy, banking, insurance, and financial services) with consistent data over the past 10 quarters reveals that operating profit grew just 6 percent year-on-year—the slowest in five quarters and the seventh consecutive quarter seeing single-digit growth.
Early trends show sluggish Q4 earnings growth, persistent cost pressures
3) Profit-Booking After Recent Rally: Profit-booking was seen on Friday, following a sharp run-up in the markets over the past several sessions. On Thursday, the markets had snapped a seven-day winning streak.
4) Banking Stocks Drag: The Nifty Bank index fell nearly 1.6 percent. Axis Bank shares declined over 3.5 percent after the private sector lender reported a slight drop in net profit for the March quarter to Rs 7,117 crore, compared to Rs 7,130 crore a year ago.
Eleven out of the twelve Nifty Bank constituents ended in the red. IndusInd Bank was the lone gainer, trading marginally higher.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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