Sensex, Nifty fall for 2nd day as IT stocks slip ahead of TCS Q1 results; small, midcaps pare gains

Laggards on the index included Bharti Airtel, Cipla, Dr Reddy's, Wipro, and Apollo Hospitals Enterprises.

Benchmark indices Nifty and Sensex slipped lower for a second session in a row on July 10 as investors adopted a wait-and-watch approach ahead of the Q1 earnings season and a potential trade deal between India and the US. IT stocks slipped ahead of Q1 earnings kickstarting today, while the broader market pared gains to trade flat.

At about 10:20 am, the Sensex was down 179.98 points or 0.22 percent at 83,356.10, and the Nifty was down 61.95 points or 0.24 percent at 25,414.15. About 1804 shares advanced, 1329 shares declined, and 150 shares remained unchanged.

"The strength on Wall Street may partly reflect optimism about a potential trade agreement between the U.S. and the European Union. Reports indicate that EU negotiators are closing in on a trade deal with the U.S. that would cement higher tariffs than those granted to the U.K," Devarsh Vakil, Head of Prime Research at HDFC Securities, said. He added that any progress in finalising trade agreements over the coming weeks and months should reduce uncertainty, while any flexibility in lowering tariffs should help contain inflation and growth concerns.

NSE sectoral indices were largely negative in early trade on Thursday, with the India VIX rising 1.01 percent, indicating a slight uptick in market volatility. Nifty Realty was the top gainer, up 0.86 percent, followed by modest gains in Nifty Metal and Private Bank, which rose 0.20 percent and 0.11 percent, respectively. Nifty Smallcap 100 and Consumer Durables saw marginal gains, while Midcap 100 was flat.

On the flip side, Nifty IT and Pharma were the biggest losers, down 0.72 percent and 0.73 percent, respectively. Other indices trading in the red included Auto, Bank, Energy, FMCG, Infrastructure, Media, Oil & Gas, and PSU Bank, all slipping between 0.04 and 0.37 percent.

As for individual stocks, Prestige Estates Projects rose 2 after global and domestic brokerages issued upbeat views on the real estate developer, citing its strongest-ever quarterly performance and robust outlook. Morgan Stanley maintained an Overweight rating with a target price of Rs 1,700, while Nuvama raised its target to Rs 2,009 and reiterated a Buy call.

Shares of housing finance companies rose by up to 5 percent after Bernstein initiated coverage on four listed firms with a largely positive view on the sector, citing structural growth opportunities and business model resilience. The brokerage has rated HomeFirst Finance, Aptus Value Housing, and Aadhar Housing Finance as ‘Outperform’, while assigning a ‘Market Perform’ rating to Aavas Financiers.

TCS shares slipped 1 percent ahead of its Q1 results later today. The IT giant is likely to report a slight improvement in dollar revenue growth for the June quarter on a sequential basis. The country’s largest IT services firm, set to announce its first-quarter results on Thursday evening, is also expected to post a rise in net profit, reversing the decline seen in the previous quarter.

As long as the index holds above 25,350, the bullish undertone is expected to strengthen. However, a sustained close above the 25,500 mark will be vital to establish a clear directional bias in the next session. On the downside, the 25,300–25,400 zone has emerged as a critical support area, where the index has repeatedly found buying interest. A decisive close above 25,550 backed by strong buying could reinvigorate bullish momentum and open the door toward the psychological barrier of 26,000.

Maruti Suzuki, Jio Financial Services, Eternal, IndusInd Bank, and Tata Steel were the top gainers on the Nifty. Laggards on the index included Bharti Airtel, Cipla, Dr Reddy's, Wipro, and Apollo Hospitals Enterprises.