The benchmark equity indices erased gains on Thursday as investors booked profits ahead of the Bihar state election results, pulling the Sensex down about 300 points from the day’s high and pushing the Nifty below the 25,950 mark.
Earlier in the session, the Sensex rose to an intraday high of 84,919.43, gaining 452.92 points or 0.53 percent. The broader Nifty crossed the 26,000 level for the first time since October 30, touching a high of 26,010.70, up 0.52 percent.
However, profit booking was seen post 2 pm, wiping out intraday gains. The Sensex quoted at 84,478.67. The Nifty settled at 25,879.15.
ETERNAL, Tata Motors and Mahindra & Mahindra were among the major laggards in the Nifty50 pack, declining up to 3 percent, while the Asian Paints and Hindalco Industries were the top gainers, rising up to 4 percent. Market breadth turned negative as about 1724 shares advanced, 2078 shares declined and 127 shares unchanged.
Key factors behind market decline
1) Profit booking: Equity indices witnessed profit booking after the benchmarks rose for three straight sessions, following which Nifty briefly reclaimed the psychologically important 26,000- mark.
2) FII selling: Foreign Institutional Investors (FIIs) sold equities worth Rs 1,750.03 crore on Wednesday, marking their third consecutive session of net selling.
3) Caution ahead of Election result: Markets remained cautious ahead of the Bihar election results on Friday. Exit polls indicated that the ruling National Democratic Alliance (NDA) may retain power. Analysts said domestic equities are likely to consolidate near current levels until the results are announced.
A surprise outcome could trigger a 5–7 percent correction in Indian markets as it may affect policy stability, according to InCred Equities. "Investor sentiment remains cautiously optimistic, with partial profit booking likely to offset any dip-buying, Amruta Shinde, Analyst at Choice Broking told Reuters.
4) Rupee movement: The rupee traded in a narrow range and slipped 7 paise to 88.69 against the US dollar in early trade on Thursday. A strong dollar index and subdued domestic equity sentiment weighed on the local unit, even as optimism over US-India trade talks provided some support, forex dealers said.
5) Volatility index: The India VIX, the market’s fear gauge, rose after declining over 2 percent in the previous session. Around 2:45 pm, it was up 0.54 percent at 12.18.
Technical view
Anand James, Chief Market Strategist at Geojit Financial Services, said, "The doji formed yesterday after entering our target region of 25,850–25,980 hints at indecision, warranting caution. However, oscillators remain accommodative towards a larger rise, aiming for 26,130–26,550. The day’s upside momentum could, however, be challenged if early dips fail to hold above 25,840. We will wait for a fall below 25,630 to switch sides."
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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