Sensex and Nifty Decline as Foreign Outflows and Weak Earnings Weigh on Market Sentiment
Mumbai: Benchmark indices Sensex and Nifty witnessed a sharp decline in early trade on Monday, as investors reacted to a combination of persistent foreign fund outflows, disappointing quarterly earnings reports, and weak cues from global markets. The indices were pressured by a weak short-term trend and cautious investor sentiment, which has led to increased volatility in the equity markets.
Market Overview
In the early trading hours, the BSE Sensex dropped 484.98 points, standing at 79,001.34, while the NSE Nifty lost 143.6 points, trading at 24,004.60. This drop came amid a backdrop of foreign institutional investors (FIIs) continuing to offload equities, with reports showing that FIIs sold stocks worth Rs 3,404.04 crore on Friday, further compounding the bearish sentiment in the market.
Sectoral Performance
From the 30-share Sensex index, Asian Paints emerged as one of the biggest losers, falling over 8% following its disappointing quarterly earnings. The company reported a 43.71% decline in consolidated net profit, amounting to Rs 693.66 crore for the September quarter. The decline was attributed to a combination of soft demand, material price inflation, and weaker performance in the decorative and coatings business within the domestic market.
Other major stocks that dragged the indices down included Axis Bank, Adani Ports, Nestle, Reliance Industries, Tata Steel, and IndusInd Bank. In contrast, Tata Motors, Power Grid, Maruti Suzuki, and HCL Technologies saw some upward movement and were among the gainers.
Global Cues and Investor Sentiment
The weak trend in Indian equities was mirrored by Asian markets, with Seoul, Tokyo, Shanghai, and Hong Kong all showing declines during early trade. The global market mood, however, was somewhat buoyed by positive closing figures in Wall Street, where the Dow Jones and S&P 500 ended on a higher note, providing a limited cushion for international investors.
Despite this, Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, noted that the Indian markets remain under pressure due to relentless foreign selling. He further stated that the short-term market trend remains volatile and choppy, with the ongoing consolidation phase likely to persist, weighed down by weak market fundamentals and investor caution.
Earnings Downgrades and Economic Outlook
Adding to the downward pressure on market sentiment are the worse-than-expected earnings downgrades for the upcoming fiscal year (FY25). V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, emphasized that while global markets have seen a sustained rally, with the Dow and S&P 500 reaching new milestones, Indian equities have failed to benefit from this momentum. He highlighted that the negative earnings revisions for Indian companies have contributed to the bearish sentiment, with bears dominating the near-term outlook for Indian stocks.
Crude Oil Prices
On the commodities front, global oil prices showed a slight decline. The Brent crude benchmark dipped 0.42% to USD 73.56 per barrel, a trend that may have some mitigating impact on inflation expectations, particularly in India, which is a major importer of crude oil.
