Sensex down for 5th day, Nifty flat; rebound likely or further weakness ahead?

Domestic equity benchmarks Sensex and Nifty ended Tuesday’s session on a muted note, with markets struggling for clear direction amid thin year-end trading volumes and continued caution over foreign fund outflows. 

Select buying interest in heavyweight stocks such as Tata Steel, Mahindra & Mahindra and Bajaj Finserv lent some support, but gains were capped by selling pressure in stocks like Eternal and Infosys, keeping the benchmarks largely range-bound through the day.

At close, the Sensex extended its slide for the fifth session, fell 20.46 points, or 0.02% to settle at 84,675.08, while the Nifty closed 3.25 points or 0.01% lower, at 25,938.85.

Eternal emerged as top loser on the Sensex, falling 2.10% to Rs 277. IndiGo followed with a 1.37% drop, while Infosys, Asian Paints, UltraTech Cement, and Bajaj Finance declined 1.28%, 1.09%, 0.84% and 0.76%, respectively. 

Five stocks, namely Infosys, Eternal, Reliance Industries, Bajaj Finance and InterGlobe Aviation (IndiGo), contributed heavily to the Sensex’s decline.      

Among sectoral indices, the BSE Metal index surged 1.95% to close at 36,263.47, while the BSE IT declined 0.81% to settle at 36,820.30.

Overall, of the 4,347 actively traded BSE stocks, 1,936 closed higher, 2,252 declined, and 159 remained unchanged. During the session, 108 stocks touched their 52-week highs, while 195 fell to 52-week lows. Meanwhile, 185 scrips hit their upper circuits, and 156 were locked in lower circuits.

Vinod Nair, Head of Research at Geojit Investments Limited, said the domestic market witnessed heightened volatility on the monthly expiry day and eventually closed flat, even as supportive global cues and selective value buying offered limited support. 

“A stronger rupee provided some respite, yet overall sentiment stayed cautious amid persistent FII outflows. Sector-wise, while auto stocks gained on robust IIP data, metal stocks gained due to higher metal prices enabling better realisations. Similarly, PSU banks advanced on improved asset quality. Looking ahead, the market is anticipated to stay sideways, awaiting more pronounced outcomes from US-India trade talks and the Q3 results calendar," Nair said.

Ajit Mishra, SVP–Research at Religare Broking Ltd, said markets ended the final expiry session of the calendar year on a subdued and largely flat note. He added that after an initial dip, the Nifty moved in a tight range for most of the day before closing around the 25,947 mark, reflecting a lack of strong directional cues.

Mishra said sectoral trends were mixed, with rollover and unwinding of derivative positions keeping market participants active. According to him, metal, auto and banking stocks outperformed during the session, while realty, IT and FMCG counters came under mild pressure. He noted that the broader markets largely mirrored the benchmarks and also closed almost unchanged.

“With global cues remaining mixed and trading volumes subdued, participants are likely to stay in a wait-and-watch mode in search of the next directional trigger. In the interim, a stock-specific approach remains preferable, with banking, auto and metal stocks continuing to display relative strength, while other sectors contribute on a rotational basis," Mishra said.