Key facts
- Indian stock market erased most of its intraday gains on Wednesday.
- The Sensex recorded marginal gains, while the Nifty slipped into the red.
- Nifty Smallcap 100 and Nifty Midcap 100 indices dropped over 1% each.
- Investors turned cautious ahead of a key US inflation print.
- FMCG stocks outperformed, while metals lagged.
- Private banks advanced following RBI's easing of FCNR(B) and ECB norms.
Indian stock markets experienced a reversal on Wednesday, with the benchmark Sensex managing only marginal gains and the Nifty closing in the red. The decline was broad-based, with the Nifty Smallcap 100 and Nifty Midcap 100 indices both falling by more than 1%.
Investors adopted a cautious stance ahead of a crucial US inflation print, which is expected to significantly influence the Federal Reserve's monetary policy decisions. Early gains were eroded by profit-taking activities. Geopolitical developments provided limited support, while subdued oil prices also contributed to the cautious sentiment.
Sectoral performance was mixed. Fast-moving consumer goods (FMCG) stocks outperformed, driven by expectations of price hikes. Private banks saw advances following the Reserve Bank of India's (RBI) easing of norms for FCNR(B) deposits and External Commercial Borrowings (ECBs). Conversely, metal stocks lagged due to softer commodity prices.
Analysts noted that domestic bond yields were lower, supported by steady foreign interest after recent policy measures. However, a slowdown in mutual fund inflows signaled emerging pressure on equities amidst ongoing geopolitical uncertainties. Vinod Nair, Head of Research at Geojit Investments, highlighted this cautious sentiment.
Technical analysis suggests a weak broader trend for the Nifty, which continues to form lower highs and lower lows and is trading below its 20-day moving average. The Relative Strength Index (RSI) remains below the 50 mark, indicating subdued momentum. Vatsal Bhuva, Technical Analyst at LKP Securities, advised a range-bound approach, identifying immediate support at 23,200 and key resistance between 23,450–23,550, with an overall expected trading range of 23,000–23,550.
SBI Securities placed immediate support for the Nifty in the 23050-23000 zone, warning that a sustained move below this could lead to further weakness towards 22850 and 22700. Upside resistance was seen in the 23350-23400 zone.
Active trading was observed in stocks like ICICI Bank, HDFC Bank, and Reliance Industries in terms of turnover. Vodafone Idea, Ola Electric, and Yes Bank were the most active by volume. Stocks such as Inox India and Chambal Fertilisers showed buying interest, while Oil India and IFCI faced selling pressure. Several stocks, including Inox India and Apar Industries, reached 52-week highs, whereas Go Digit General Insurance and HDFC Life hit 52-week lows.