Sensex, Nifty end off lows as heavyweight financials, RIL lend support; IT stocks hit hard

Nifty 50 had slipped below 22,400 iintraday.

Indian benchmarks--the Nifty 50 and Sensex recovered lost ground from their day's lows to end the volatile session on March 12 near the flatline, with minor cuts. The benchmarks began the session on a positive note, but soon gave up gains to slip into the red amid heavy selling in information technology stocks. However, strong gains heavyweight names like Bajaj Finance, HDFC Bank, ITC, Tata Motors and Reliance Industries offered some respite, lifting the headline indices from their day's lows.

Meanwhile, caution also persisted in the run-up to the US inflation report, due for a release later today. The US inflation print gains prominence, more so amid worries that Trump's tariffs would trigger an uptick in prices, potential forcing the Federal Reserve into holding rates higher for longer. This could have a detrimental impact on the US economy, with many even fearing a recession.

Adding to that, Trump unleashed additional tariffs on Canadian steel and aluminium imports, doubling it to 50 percent from the earlier 25 percent. The fresh wave of tariffs intensified concerns of more retaliation, thereby sparking a multi-front global trade war. On the other hand, the European Union is also putting a plan in place to impose counter tariffs on 26 billion euros ($28.33 billion) worth of US goods from next month in response to US tariffs on steel and aluminium, further sending the global trade setup for a toss.

"Persistent uncertainties surrounding global trade and the fear of a US recession continue to influence the domestic market's momentum. Despite the stabilisation in valuation to the 5-year average and signs of improvement in urban and rural demand, investor risk appetite remains subdued," said Vinod Nair, Head of Research, Geojit Financial Services.

To that effect, global cues also remained weak, with Wall Street indices extending the rout overnight and Asian equities showcasing weakness.

"Today's key concern is whether the ongoing correction happening in the US market can spill over to the global market. The US market is under pressure from weakening economic data and uncertainty over tariff policy," Nair added.

At close, the Sensex fell 72.56 points or 0.10 percent to 74,029.76, while the Nifty declined 27.40 points or 0.12 percent to 22,470.50. Market breadth remained weak, as 1,440 shares rose, 2,383 fell, and 129 remained unchanged.

In the broader markets, indices showcased a mixed trend. The Nifty IT index closed with sharp cuts of 3 percent, followed by Nifty Media, Nifty Realty and Nifty PSU Banks, which ended 1-2 percent lower. On the flipside, Nifty Bank, Nifty Auto, Nifty Energy and Nifty Pharma indices settled with gains of up to 0.5 percent.

The midcap space remained under pressure, with the key index sinking 0.6 percent, while the smallcap index slipped around 0.2 percent.

Information technology stocks took a huge hit, with shares of Infosys, Wipro, HCLTech, TCS and Tech Mahindra plunging 2-4 percent after Morgan Stanley's recent note pointed towards downside risks for the sector.

Morgan Stanley warned that a shifting global macroeconomic environment and rapid technological changes pose increasing risks to the tech sector, potentially impacting valuations and revenue growth. Citing these uncertainties, the firm lowered target prices for major domestic IT companies, highlighting strong downside risks to the sector, which heavily dragged investor sentiment.

Among specific stocks, IndusInd Bank emerged as the top Nifty gainer with its over 4 percent uptick, rebounding after a five-day losing streak. This recovery follows a sharp 27 percent drop the previous day due to reported discrepancies in its derivatives portfolio, which the bank estimated would impact 2.35 percent of its net worth. Shares of HDFC Bank and Kotak Mahindra Bank also rose around 2 percent each, recovering from their recent selloff.

On the technical front, Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan, noted that the Nifty successfully defended the 22,300 support level, absorbing selling pressure from the IT sector. "With a positive crossover on daily and hourly momentum indicators signalling a buy, the short-term outlook remains bullish with a target of 22,800-23,000, while key support lies at 22,300-22,250," Gedia said.