Domestic Equity Markets Decline Amid Profit Booking and FII Outflows
Market Overview
Mumbai, Dec 2: The domestic stock markets closed lower on Tuesday, primarily due to profit booking, foreign institutional investor (FII) outflows, and apprehensions ahead of the Reserve Bank of India's (RBI) upcoming policy meeting this week.
The Sensex finished at 85,138.27, reflecting a decrease of 503.63 points or 0.59 percent. The 30-share index opened lower at 85,325.51, compared to the previous session's close of 85,641.90, and further declined amid selling pressure in banking, IT, and other major sectors, reaching an intra-day low of 85,053.0.
The Nifty index closed at 26,032.20, down 143.55 points or 0.55 percent.
Analysts noted, "The domestic markets are experiencing profit booking due to concerns over a weakening rupee and ongoing FII outflows. Additionally, the recent overhaul of the NSE’s sectoral indices in accordance with SEBI regulations has led to corrections in significant banking stocks."
In the short term, diminishing expectations for an RBI rate cut, prompted by robust GDP data and uncertainties surrounding US-India trade discussions, may keep investors cautious, the analysts added.
Among the stocks in the Sensex, ICICI Bank, Axis Bank, HDFC Bank, BEL, L&T, PowerGrid, Bajaj FinServ, Mahindra and Mahindra, ITC, Tata Motors PV, and HCL Tech all closed in the red. Conversely, Asian Paint, Bharti Airtel, Maruti Suzuki, Bajaj Finance, and Hindustan Unilever saw gains.
Most sectoral indices ended lower due to selling pressure. The Nifty Fin Services index fell by 249 points or 0.10 percent, while the Nifty Bank index decreased by 407 points or 0.68 percent. The Nifty Auto index dipped by 13 points or 0.05 percent, and the Nifty FMCG index closed 109 points or 0.20 percent lower.
Siddhartha Khemka, Head of Research at Wealth Management, Motilal Oswal Financial Services Ltd, stated, "The majority of sectors closed in the negative, with private banks and financial services leading the decline, down 0.7 percent and 0.8 percent respectively. In contrast, the PSU Bank index gained 0.5 percent, marking its second consecutive day of increases."
Rate-sensitive sectors such as Auto, Realty, and Consumer Durables experienced profit booking amid cautious market sentiment. Monthly auto sales for November surpassed market expectations, with wholesales showing strong growth post-festivities, supported by festive order backlogs and the normalization of dealer inventory, Khemka added.
Broader indices also followed this trend. The Nifty Smallcap 100 index fell by 98 points or 0.55 percent, the Nifty Midcap 100 index dipped by 132 points or 0.22 percent, while the Nifty 100 index ended the session 126 points or 0.47 percent higher.