Nifty 50 ends 14-day winning streak on US recession worries

The benchmark Nifty 50 index ended its 14-day winning streak today, as renewed concerns about a potential recession in the US weighed on investor sentiment. This came after weak manufacturing data was reported from the US on Tuesday, prompting caution across global markets. In India, the Nifty 50 and Sensex indices remained in the red for most of the trading session, dragged down by persistent losses in metal and information technology (IT) stocks.

Despite the overall downturn, a recovery in heavyweight stocks like HDFC Bank and Reliance Industries, coupled with gains in defensive sectors, helped the indices to pare some of their losses in the latter half of the session. By the close of trading, the Nifty 50 settled at 25,198.70 points, and the Sensex ended at 82,352.64 points, both down by 0.3%.

Global market trends also influenced domestic trading. Significant sell-offs in markets across Japan, South Korea, and Taiwan, where indices plunged between 3-5%, contributed to the cautious stance of Indian investors. However, the broader market in India showed resilience, with the Nifty small-cap indices closing flat and the mid-cap indices experiencing only slight declines.

The day’s losses in the benchmark indices were somewhat mitigated by gains in major stocks like HDFC Bank and Reliance Industries. Defensive sectors, including healthcare and pharmaceuticals, also supported the market, with Sun Pharmaceutical Industries, Apollo Hospitals Enterprise, and Hindustan Unilever emerging as top gainers within the Nifty 50.

Conversely, IT and metal stocks were among the worst performers. Shares of LTIMindtree and Wipro fell by 1-3%, leading the decline in the IT sector. Hindalco Industries, a major player in the metals sector, also saw its shares drop by nearly 2%, making it one of the weakest performers on the Nifty 50.

A sharp decline in crude oil prices had a mixed impact on various stocks. Upstream company Oil and Natural Gas Corp (ONGC) saw its shares fall, while oil marketing companies benefitted, as lower crude prices are expected to improve their profit margins. Shares of Asian Paints surged by over 2%, ranking among the top gainers on the Nifty 50, due to expectations that the company would benefit from the drop in crude oil prices, a key raw material for the paint industry.

Sectoral performance was varied, with the Nifty PSU Bank index taking the hardest hit, closing 1.7% lower. The Nifty IT and Nifty Metal indices also faced significant losses. Earlier in the day, all sectoral indices were in the red, but some managed to recover as trading progressed. The Nifty Healthcare and Nifty Pharma indices emerged as the top sectoral gainers.

Coal India experienced a steep decline, with its shares falling 3.1% to a near-one-month low. This drop came after Nuvama Institutional Equities expressed concerns over the company's declining volumes and softening e-auction prices. The firm also lowered its target price for Coal India, advising investors to "sell on rise."

In contrast, defence-related stocks saw strong gains, with shares of Garden Reach Shipbuilders, Mazagon Dock Shipbuilders, and Cochin Shipyard rising between 2-7%. Investor optimism was fueled by the government’s recent approval of 10 capital acquisition proposals worth ₹1.45 trillion, which is expected to result in fresh orders for these companies.

Overall, the market sentiment was dominated by global economic concerns and sector-specific dynamics, with defensive plays providing some stability in an otherwise volatile session. As global uncertainties persist, investors are likely to remain cautious, particularly in sectors vulnerable to international economic trends.