Sensex down 520 pts, Nifty below 23,600 as IT, metals dampen mood; broader markets see sharper fall

Laggards included Trent, Shriram Finance, BEL, Titan Company and Infosys.

Benchmark indices Nifty and Sensex opened the trading session on a weak note on January 8, weighed down by a sharp fall in IT and metal stocks. Pharma and energy stocks traded in the positive, offsetting the fall to some extent.

The drop comes as US stocks tumbled on Tuesday after the latest economic data raised concerns of an inflation rebound that may slow down the Federal Reserve's pace of monetary policy easing, with Asia too following US cues.

Advance GDP estimates showing slow economic growth, and subdued business updates from lenders are also weighing on the outlook for the quarter.

At about 10:30 am, the Sensex was down 391.19 points or 0.50 percent at 77,807.92, and the Nifty was down 108.90 points or 0.46 percent at 23,599.00. About 1,112 shares advanced, 2,103 shares declined, and 99 shares unchanged.

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"The market is expected to consolidate in the near term, driven by event-based reactions, particularly corporate earnings, which will be the key trigger for momentum. The Nifty faces resistance at 24,200, with support at 23,300-23,500, indicating no clear directional move," Ruchit Jain, Vice President of Technical Research at Motilal Oswal said in a conversation with Moneycontrol.

GDP estimates have largely been factored in, and their relative strength compared to global peers is a positive sign despite weak recent earnings and global uncertainties. FIIs have been selling since October, coinciding with Q2 earnings, and further selling will hinge on upcoming Q3 results. A strong earnings season could curb FII outflows, he added.

Also read: Brokerages bullish on Reliance Industries amid cheap valuations, shares could rally 36%

The broader market, represented by the mid and small-cap indices, mirrored weak trends as the two fell 1.4 and 1.2 percent, respectively. 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.

Among sectors, Nifty Metal was among the worst performers, falling nearly 1 percent as investors took booked profits following a decent rise in the previous session. IT stocks extended their decline ahead of Q3 earnings slated to commence on January 9. TCS, India's largest IT company, will declare results on Thursday. Nifty Bank, FMCG, and Realty fell to 0.7 percent. Gainers, on the other hand, and Oil and Gas and Infra. Pharma and Healthcare shed gains to trade in the red.

Quite a few stocks were buzzing in trade today. One such stock was Reliance Industries, which darted up over 1 percent after international brokerages Jefferies and Bernstein reiterated their bullishness on the chemicals-to-retail conglomerate. Reliance Industries stock price has corrected 22 percent from its 52-week high. As a result, Jefferies said RIL's valuations have become the cheapest since the COVID-19 shock in March 2020, making for a great buying opportunity as the risk-reward ratio turns attractive.

Tata Steel shares slipped over a percent despite reporting a 6.17 percent year-on-year (YoY) increase in India’s crude steel production for Q3 at 5.68 million tonnes (MT), supported by the ramp-up of its newly-commissioned 5 MTPA blast furnace at Kalinganagar. Deliveries in India reached a record 5.29 MT for the quarter, up 8.4 percent YoY, driven by robust domestic sales and strategic export initiatives.

Read more: New RBI chief faces calls to unshackle rupee amid surging dollar

Exicom Telesystems shares gained 5 percent tp hit an upper circuit of Rs 250 after the EV charging and critical power solutions manufacturer signed a Memorandum of Understanding (MoU) with Mufin Green Infra to expand EV charging infrastructure in India.

"Looking at the broader chart structure since the all-time high of 26,277, the index has been forming lower highs—first at 24,792 and more recently around 24,200—while establishing higher lows, such as 23,460 after forming bottom in November at 23,263. This pattern indicates a narrowing range, with prices converging toward an apex, signalling the likelihood of a breakout in the near term, which could set the tone for the next significant move," Sameet Chavan, Head of Technical Research at Angel One.

"For now, caution remains the key. A decisive break below 23,500 could resume the recent downtrend, potentially dragging the index towards 23,200–23,000 or even lower in the near term. On the upside, prices are facing resistance in the 23,900–24,000 zone, with positive momentum expected to pick up only on a breakout beyond 24,200," he added.

Dr Reddy's, ONGC, Reliance Industries, BPCL and Bajaj Finserv were the top gainers on the Nifty. Laggards included Trent, Shriram Finance, BEL, Titan Company and Infosys.