Sensex declines over 300 pts, Nifty below 23,600 as energy, PSU bank stocks tumble; FMCG shines; all eyes on TCS Q3

HUL, Britannia Industries, Kotak Mahindra, Nestle, and Bajaj Auto were the top gainers on the Nifty.

Benchmark indices Nifty and Sensex extended their slide into the red on January 9, weighed down by energy and PSU bank stocks that deepened an already fragile market sentiment. Bucking the trend, FMCG stocks shone brightly, buoyed by CLSA’s bold call to make consumer staples its top bet for 2025. Investors await TCS' Q3 earnings report set to be out later today.

Weak global cues added to the pressure, with Asia-Pacific markets reeling from fears that sticky inflation might delay Federal Reserve policy easing. Meanwhile, China's persistent consumer disinflation further dampened investor confidence, casting a shadow over the session.

At noon, the Sensex was down 316.95 points or 0.41 percent at 77,831.54, and the Nifty was down 109.60 points or 0.46 percent at 23,579.35. About 1,345 shares advanced, 1,974 shares declined, and 108 shares unchanged.

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V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said that selling pressure is expected to persist, weighing on the market in the near term. This is because foreign institutional investors (FIIs) have sold equities worth Rs 10,419 crore so far in January, and with the dollar index at 109 and the 10-year U.S. bond yield at 4.67 percent make it favourable for them to sell.

As the Q3 earnings season kicks off today, market reactions will hinge on company results. TCS's performance will set the tone for the IT sector, which stands to benefit from the strong U.S. economy and a depreciating rupee. Meanwhile, market volatility is likely to stay elevated due to expectations around President Trump’s policy decisions and the upcoming Indian Union Budget proposals.

Also read: Do market corrections trigger fear among retail investors? SIP data shows otherwise

The broader market, which comprises mid-small cap indices, mirrored weak trends. While this smallcap index was down 0.44 percent, the midcap 100 index slipped slightly lower by 0.1 percent. In 2024, the Nifty Smallcap 100 and Nifty Midcap 100 indices have outperformed, creating decent gains of over 20 percent and outpacing the Nifty's relatively modest 9 percent rise.

The Nifty PSU Bank index led the losses among sectoral indices, slipping 1 percent due to sharp declines in SBI, Bank of Baroda, and Union Bank. Private banks also came under pressure, with HDFC Bank, ICICI Bank, and Axis Bank falling up to 1 percent. Meanwhile, Nifty IT edged lower by 0.4 percent ahead of TCS's Q3 earnings announcement scheduled later in the day. Nifty Energy, Bank, Oil and Gas, Metal, and Infra called almost a percent each.

Read more: TCS Q3 Preview: Furloughs to cap revenue growth, margins to get boost from rupee depreciation

In contrast, Nifty FMCG stocks stood out as top performers, buoyed by strong investor interest. The surge followed CLSA’s decision to make consumer staples its biggest anti-consensus call for 2025, marking a shift after four years of avoiding the sector in its India portfolio. Colgate-Palmolive led the charge, jumping over 4 percent, while Britannia gained nearly 3 percent. Shares of HUL and Dabur also rose, each adding around 2 percent.

Two-wheeler major Bajaj Auto rose as much as 2 percent after brokerage firm CLSA upgraded it to an 'outperform' call from the previous 'underperform' rating. The upgrade stemmed from the recent correction in the stock combined with growth prospects of Bajaj Auto's electric two-wheeler business.

GTPL Hathway shares rose 17 percent on January 9 ahead of the company's December quarter results. The company reported a significant decline in net profit during the second quarter of the current fiscal year. Net profit plummeted by 61.8 percent year-on-year to Rs 13.7 crore, compared to Rs 35.9 crore in the same period last year.

Kalyan Jewellers' share price fell over 4 percent to extend losses for a fifth consecutive session. Earlier, the company released its Q3 FY25 updates, highlighting the likeliness of its net revenue to grow by 39 percent with India business surge standing at 41 percent on festive and wedding demand. The quarter also witnessed growth in same-store sales, close to 24 percent.

"Nifty can find support at 23,600 followed by 23,500 and 23,400. On the higher side, 23,800 can be immediate resistance, followed by 23,900 and 24,000," Hardik Matalia, Derivative Analyst at Choice Broking, said. "The charts of Bank Nifty indicate that it may get support at 49,400 followed by 48,900 and 48,500. If the index advances further, 50,000 would be the initial key resistance, followed by 50,300 and 50,500," he added.

HUL, Britannia Industries, Kotak Mahindra, Nestle, and Bajaj Auto were the top gainers on the Nifty. Laggards on the Nifty included ONGC, Coal India, L&T, Shriram Finance, and BPCL.

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