Closing bell: Sensex and Nifty decline on selling in banking and financial stocks

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The benchmark equity indices, Sensex and Nifty, experienced a decline on Wednesday, primarily driven by selling pressure in banking and financial stocks, alongside weak trends in global markets. According to PTI, the BSE Sensex fell by 426.85 points, or 0.53 per cent, to settle at 79,942.18, while the NSE Nifty dropped 126 points, or 0.51 per cent, to close at 24,340.85.

Traders noted that weak earnings reports and ongoing foreign fund outflows further impacted market sentiment. Within the 30-share Sensex pack, notable laggards included Infosys, ICICI Bank, Kotak Mahindra Bank, Mahindra & Mahindra, State Bank of India, HCL Technologies, Axis Bank, NTPC, and HDFC Bank. These stocks faced significant selling pressure, contributing to the overall market downturn.

In contrast, a few stocks managed to defy the broader negative trend and ended the day in positive territory. Maruti, IndusInd Bank, Adani Ports, ITC, and UltraTech Cement were among the gainers, showcasing resilience amidst the prevailing market conditions.

Foreign institutional investors (FIIs) continued to be net sellers in the capital markets on Tuesday, offloading shares worth Rs 548.69 crore, as per exchange data. This trend has raised concerns about the overall health of the equity market, especially with FII selling remaining persistent.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that the market's near-term outlook will be influenced by two contrasting factors. On the positive side, he pointed to the sharp decline in FII selling, which has fallen to just Rs 548 crore on Tuesday. This suggests that the tactical trade of "Sell India, Buy China" may be coming to an end. He believes that with increased participation from Domestic Institutional Investors (DIIs) and retail investors entering the market, combined with a tapering of FII selling, the market could receive a near-term boost, particularly in light of the festive season.

However, Vijayakumar cautioned that any potential uptrend might not be sustainable. He highlighted that Q2 earnings numbers indicate softness in earnings projections for FY25, which could weigh on market performance.

In Asian markets, trends were mixed. Seoul, Shanghai, and Hong Kong ended lower, while Tokyo recorded a positive finish. European markets also traded lower, reflecting the prevailing sentiment. On Tuesday, the US markets concluded on a mixed note, further adding to the uncertainty.

In the commodities sector, the global oil benchmark Brent crude saw a slight increase, climbing 0.63 per cent to USD 71.57 a barrel. This rise in oil prices may have implications for inflation and overall economic conditions.

In summary, the Sensex and Nifty faced declines primarily due to selling in banking and financial stocks, amidst weak global trends and continued FII outflows. While there are signs of a potential recovery driven by domestic participation, concerns regarding earnings performance could hinder sustained upward momentum in the market.

(With inputs from PTI)