The equity benchmarks retreated from record highs on Thursday as investors booked profits at higher levels, pulling the key indices off their intraday peaks.
The Nifty touched a fresh all-time high of 26,310.45, surpassing its previous record of 26,277.35 hit on September 27, 2024. The Sensex crossed the 86,000 mark for the first time, rising to 86,055.86 in early trade.
However, sentiment turned softer as the Sensex settled 110.88 points or 0.13 percent lower at 85,720.38 — about 335 points off the day’s high — while the Nifty fell below the 26,250 mark to 26,215.55, down 10.25 points or 0.039 percent.
Eicher Motors, ETERNAL and Oil & Natural Gas Corporation were the major laggards in the Nifty50 pack, declining up to 3 percent, while the Bajaj Finance and Hindustan Unilever were among the top gainers, rising up to 3 percent. About 1820 shares advanced, 1836 shares declined, and 170 shares unchanged.
Why markets pared gains
1) Profit-booking at higher levels: After a sharp rally, traders opted to lock in gains. Most major sectors slipped into the red, barring banking and financial stocks, which held firmer compared with the broader pack. The Nifty PSU Banks also slipped about 1 perent amid profit booking. Indian Bank and Bank of India were among the major laggards in the Nifty PSU index, declining up to 3 percent.
2) Monthly expiry volatility: Thursday’s moves also came on the day of the monthly derivatives expiry for the Sensex. Expiry sessions typically witness sharper price swings as traders roll over positions or square them off, often leading to volatile intraday action in the markets.
3) Technical signals: Anand James, Chief Market Strategist at Geojit Financial Services, said the index was expected to retain a positive bias above 26,165 but warned of further profit-taking if it failed to stay above 26,098.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, said the broader tone remained constructive but projected only a measured upside from current levels in the near term.
4) Midcap and smallcap weakness: Broader indices underperformed, with smallcap and midcap stocks declining and ending a two-day winning run. This came even as the headline indices notched fresh 14-month highs.
"A large part of the mid-cap and small-cap universe, including several sector leaders, remains in a corrective or fragile zone despite headline indices hitting all-time highs. Sustaining the next leg of the rally will depend on a meaningful earnings recovery, stability in global macros and continued domestic participation. We advise a selective, quality-focused approach rather than chasing momentum at elevated levels," Tapse said.
5) Rupee edges lower: The rupee traded 2 paise weaker at 89.24 against the US dollar as importer demand for the greenback persisted amid global market volatility. Forex traders said foreign fund inflows and softer crude oil prices offered some support but were not enough to offset broader pressure on the currency.
Technical view
Nifty: According to Sudeep Shah, Head – Technical & Derivatives Research at SBI Securities, the 26,250–26,300 band remains a key resistance zone. A sustained move above 26,300 could open the way for an upside towards 26,500 and then 26,800. Support is seen in the 26,100–26,050 region.
Sensex: Shah noted that 85,900–86,000 is likely to act as a major resistance area for the Sensex. A decisive break above 86,000 may drive the index towards 86,500 and subsequently 87,000. Support has shifted higher to the 85,600–85,500 range.
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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