Stock market today: Nifty 50, Sensex slide in choppy trade, IT stocks plummet | Stock Market News

Indian frontline indices remained range-bound in volatile trading on Wednesday, as investors chose to stay cautious ahead of the crucial US Federal Reserve meeting, where the announcement of the first rate cut in four years is anticipated. The market experienced a tug-of-war between declining IT stocks and resilient financial shares. A sharp drop in IT stocks heavily impacted the market, pulling the frontline indices down. Additionally, pharmaceutical stocks also faced significant declines. 

However, strong support from financial stocks helped cushion the overall losses, mitigating the day’s market downturn.

Amidst the volatility, the Nifty 50 concluded the session with a slight drop of 0.16 per cent, ending at 25,377 points. During trading, the index reached a new all-time high of 25,482 points, approaching the 25,500 level. Similarly, the S&P BSE Sensex finished the day at 82,948 points, marking a 0.16 per cent decline from its previous close. The index also achieved a new record high of 83,326 points during the trade. 

Among the 50 Nifty constituents, 29 stocks ended in negative territory, with TCS leading with a 3.4 per cent drop. Other notable losers included Infosys, HCL Technologies, Tech Mahindra, Wipro, Bajaj Auto, Sun Pharmaceutical, and Tata Consumer Products, all of which dropped between 3.1 per cent and 1.5 per cent.

On the other hand, small and midcap stocks underperformed the benchmark indices in Wednesday’s trade. The Nifty Midcap 100 dropped to 59,752 points, a 0.71 per cent fall, while the Nifty Smallcap 100 index tumbled by 0.64 per cent to 19,389 points.

Commenting on today’s market performance, Vinod Nair, Head of Research, Geojit Financial Services, said, “The Indian market experienced a minor profit booking with underperformance by midcaps. Mixed signals from global markets emerged ahead of the anticipated FOMC rate cut decision which is seemingly priced in a 25-bps cut.”

“Investors assess the potential for a short-term underperformance of equity given the elevated valuation and correction of metal prices. Commodities, including oil prices, are steadily declining, suggesting a potential tempering of economic growth. Investor caution is evident as gold prices rise, likely due to anticipated dollar weakness following the rate cut,” Nair added.

Nifty IT index posts worst intraday performance in 6 weeks

The sharp drop in the large-cap IT stocks has led the Nifty IT index to plunge by 3.02 per cent to 41,814 points, falling below the 42,000 mark for the first time since September 9. Today’s drop in the index was the biggest intraday drop in 6 weeks, and also this decline has pushed the index to a 2-week low.

The significant decline in IT stocks observed today is mainly due to profit-taking by investors after a strong rally over recent months. Since June, IT stocks have experienced a bullish trend, with the Nifty IT index rising by 32 per cent from June to August, leading investors to lock in profits.

This profit booking occurred ahead of the anticipated US Federal Reserve rate-reduction cycle, expected to start on September 18. With easing inflation and a cooling labour market in the US, investors are preparing for this policy shift. Market expectations had priced in a 25-basis point cut, with some anticipating a more substantial 50-basis point reduction, which analysts believe could spur a rally in stocks.

Nifty Bank hits 10-week high

Banking stocks surged sharply in today’s trading as investors shifted their focus from the IT and pharmaceutical sectors to banking, which had been lagging behind. The Nifty Bank index ended the session with a 1.08 per cent gain, closing at 52,954 points, and hit a 10-week high during the day.

Amit Goel, the co-founder and chief global strategist at Pace 360, believes the Fed rate cut will likely have a positive impact on banking stocks.

“Lower interest rates typically lead to increased borrowing activity, benefiting banks through higher loan demand and associated interest income. Additionally, lower rates can reduce the cost of funds for banks, improving their net interest margins. Moreover, lower interest rates can decrease the risk of loan defaults, enhancing the quality of banks’ assets,” Goel explained.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.