Sensex, Nifty end in red as FII selling and earnings slowdown weigh

The benchmark's struggle to sustain its gains is rooted in a mix of global and domestic challenges.

The Sensex and Nifty ended in the red on October 23, pulling back after climbing nearly half a percent earlier in the session. Gains in IT stocks, led by strong earnings from Persistent Systems and Coforge, were offset by losses in the auto and construction sectors, which dragged the Nifty 50 into negative territory.

At close, the Sensex was down 138 points or 0.2 percent at 80,081, and the Nifty was down 37 points at 24,434. About 2,117 shares advanced, 1,647 shares declined, and 99 shares remained unchanged.

The benchmark's struggle to sustain its gains is rooted in a mix of global and domestic challenges. Ongoing geopolitical tensions in the Middle East, concerns over Foreign Institutional Investors (FIIs) pulling out funds due to China's stimulus measures, and jitters surrounding the upcoming US presidential election have all contributed to market anxiety. Domestically, Q2 earnings have also shown signs of a slowdown, adding to the pressure.

Goldman Sachs lowered Indian equities to 'Neutral' from 'Overweight' as the country's slowing economic growth weighs on corporate earnings, amid record foreign outflows from domestic markets.

Follow our live blog for all the market action

"All these factors are contributing to the market correction, which was long overdue. But it's always healthy to see some level of correction," said Sanjeev Hota, VP - Head of Research at Sharekhan. He also suggested that markets may soon stabilise and enter a phase of consolidation.

Nifty IT bucked the broader market trend and climbed 2.5 percent driven by Persistent Systems and Coforge. Both stocks soared over 11 percent after delivering robust Q2 FY25 results.

Hota remains optimistic about large-cap stocks but expressed caution regarding mid and small-cap segments. "There's no significant cause for concern with large-cap stocks, particularly those with comfortable valuations. The real worry lies with small, mid-cap, and some pockets of the micro-cap space where valuations have reached astronomical levels, and deeper corrections are possible."

After the recent decline, the midcap and smallcap space experienced bargain buying in today's session. The BSE Midcap index advanced 0.5 percent and the BSE Smallcap index rose 1 percent.

Also Read | Hyundai Motor India stock rebounds 6% following a weak debut, brokerages bullish

"The next one to two trading days will be crucial," said Amit Bhuptani, Equity Derivatives Analyst at Nirmal Bang. "If Nifty can close above the 24,600 level, we might see some stability. However, if it dips below 24,300, we could see it slide further toward the 23,700 mark."

On the Nifty 50, Bajaj Finance, Tech Mahindra, Tata Consumer, Bajaj Auto, and Bajaj Finserv led the charge, gaining between 1-5 percent. In contrast, M&M, Sun Pharmaceutical, Eicher Motors, Shriram Finance, and Power Grid were the top losers, slipping 2-3 percent.

Bajaj Finance was in focus throughout the session, emerging as the top gainer on the Nifty 50. The stock surged 5 percent after the company announced a 13 percent year-on-year rise in consolidated net profit, reaching Rs 4,014 crore for Q2 FY25.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.