Indian equity markets concluded Tuesday's trading session in negative territory, ending a four-day winning streak. The 30-share BSE Sensex dropped 210 points to settle at 78,428, while the broader NSE Nifty 50 lost 159 points, closing at 24,614.90. Despite the overall decline, a sharp late-session rally in the Nifty helped recover some of the day's losses.
Global Cues and Market Divergence
The downturn in Indian markets came amidst a mixed global trend, with US markets achieving record closes while Asian markets showed varied performance. A significant point of discussion among analysts was the divergence observed between the Sensex and Nifty, particularly during the closing auction session.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, highlighted that market participants are closely watching developments in the Strait of Hormuz, hoping for stability to ease crude oil prices and moderate global bond yields. Domestically, the ongoing Reserve Bank of India (RBI) policy meeting is under scrutiny for potential measures to address global uncertainties, inflation concerns, and provide liquidity support to the banking system.
Impact of New Trading Mechanisms
Vijayakumar also commented on the impact of the new mechanism for determining F&O (Futures and Options) closing prices, stating that Tuesday's weekly expiry, combined with this new system, led to distortions in market trends. He noted a significant gap between the 3:30 p.m. and 3:40 p.m. closing prices of Nifty stocks and the index, alongside the divergence with Sensex, suggesting the new system might not be functioning as intended and contributing to heightened price volatility. This volatility, he added, triggered forced square-offs, especially among retail investors.
Top Movers and Market Cap
Among the Sensex constituents, stocks like Trent, Bajaj Finance, BEL, Tata Steel, M&M, Bajaj Finserv, and Titan emerged as top gainers, rising by up to 1.15%. Conversely, HUL, NTPC, HDFC Bank, RIL, and IndiGo were among the top losers, falling up to 1.70%.
The overall market capitalization of BSE-listed firms stood at Rs 489.32 lakh crore at the close of trade on Tuesday.
Previous Session Performance
In the preceding session on Monday, the equity market had extended its winning streak for the fourth consecutive day. The Sensex advanced 544.39 points (0.70%) to close at 78,639.03, and the Nifty 50 climbed 390.70 points (1.60%) to settle at 24,774.30.