Mixed global trends added to the subdued sentiment in Indian markets
The Indian stock market saw a downward trend on Friday, reflecting mixed global cues and a weaker performance from Wall Street overnight. Benchmark indices, including the BSE Sensex and Nifty50, were trading lower, signaling cautious investor sentiment.
Benchmark Indices Struggle Amid Global Weakness
At midday, the BSE Sensex was down by 634.51 points or 0.79%, trading at 79,309. The Nifty50 also declined by 177.45 points or 0.73%, settling at 24,011.20. The losses were primarily driven by underperformance in major stocks, particularly within the technology and banking sectors. While more than half of the listed stocks faced declines, select sectors showed resilience.
Sectoral Movements Highlight Diverging Trends
The IT sector faced the sharpest decline, shedding 0.47%. This was followed by dips in healthcare, pharma, FMCG, and private banking indices. Frontline financial stocks also displayed muted performance. On the other hand, the media sector emerged as the top gainer, rising 1.68%, supported by strong interest in digital entertainment and broadcasting companies. PSU banks followed closely, with gains of 1.31%, reflecting optimism around government-backed financial institutions.
The oil and gas sector displayed strength alongside realty, consumer durables, metal, and auto indices, signaling broader participation from defensive and cyclical stocks. Midcap and small-cap indices also performed well, with the Nifty Midcap 100 up by 0.36% and the Nifty Smallcap 100 higher by 0.55%, highlighting continued interest in smaller and growth-oriented companies.
Top Performers and Laggards
HCLTech led the gains among large-cap stocks, rising 1.04%. Other notable performers included SBI, Adani Ports & SEZ, Maruti Suzuki India, and Mahindra & Mahindra. ONGC was the standout performer on the Nifty50, rising 3.14%, supported by optimism in the energy market.
On the downside, TCS recorded a 0.71% decline, while ITC, Infosys, Asian Paints, and Kotak Mahindra Bank also dragged the market lower. Among Nifty50 constituents, Hero MotoCo emerged as the worst performer with a 2.07% decline, followed by losses in Wipro, Cipla, and Infosys.
Global Cues Weigh on Sentiment
Mixed global trends added to the subdued sentiment in Indian markets. In the Asia-Pacific region, Hong Kong’s Hang Seng index rose by 0.16%, while mainland China’s CSI 300 index fell by 0.63%. The Shanghai Composite also declined by 0.54%. Reports of potential interest rate cuts by the People’s Bank of China provided some support but failed to fully counterbalance the downward pressure. South Korea’s Kospi index and Kosdaq recorded strong gains, climbing 1.81% and 1.70%, respectively, while Australia’s S&P/ASX 200 rose by 0.50%.
Wall Street’s major indices closed lower on Thursday, extending a losing streak for the S&P 500 and Nasdaq. The Dow Jones Industrial Average dropped 151.95 points, or 0.36%, closing at 42,392.27. The S&P 500 slipped by 0.22%, while the Nasdaq Composite lost 0.16%. U.S. labor market data, which indicated an eight-month low in jobless claims, failed to lift investor sentiment.
Oil and Currency Markets Reflect Volatility
Oil prices advanced on Friday, supported by optimism surrounding China’s economic recovery and demand for fuel. U.S. crude settled 1.97% higher at $73.13 per barrel, while Brent crude climbed 1.73% to $75.93 per barrel. The rise in oil prices provided support to energy-related stocks globally.
The Indian rupee weakened further against the dollar, reaching a record closing low of Rs 85.76. Despite intervention by the Reserve Bank of India to stabilize the currency, the rupee continued to face pressure from a strong U.S. dollar, which hit a two-year high. The dollar index rose to 109.27, reflecting expectations of slower interest rate cuts by the Federal Reserve compared to other central banks.
Primary Market Activity Remains Robust
India’s primary markets displayed significant activity, with multiple IPOs underway. The basis of allotment for Indo Farm Equipment Limited and Technichem Organics Limited IPOs is set to be finalized. Citichem India Limited IPO from the SME segment is listing on the bourses, while Leo Dry Fruits and Spices Trading Ltd IPO is in its final subscription day. Fabtech Technologies Cleanrooms Limited IPO opened for subscription, while Davin Sons Retail Limited continued its second day of offerings.
December 2024 emerged as a historic month for public offerings, with 15 companies collectively raising Rs 25,425 crore. This marked the best month for IPOs since December 1996, driven by strong investor participation and a favorable market environment.
Economic Indicators Add Complexity
India’s manufacturing PMI slipped to a 12-month low in December, coming in at 56.4 compared to 56.5 in November. This decline, while marginal, indicates slower growth in fresh business orders and production. Despite the moderation, the PMI figure remains well above the 50-mark, signifying expansion in manufacturing activity.
Axis Mutual Fund released a cautious outlook for 2025, predicting limited valuation expansion and highlighting the need for selective stock picking across market caps. The forecast, coupled with subdued earnings expectations, suggests a challenging environment for broad-based market rallies.
Broader Market Perspective
The broader Indian market has shown resilience, with foreign institutional investors purchasing Rs 1,506.75 crore worth of equities on Thursday. Domestic institutional investors added Rs 22.14 crore to their portfolios, reflecting ongoing confidence in Indian equities. The market’s ability to attract foreign and domestic flows underscores its appeal despite global uncertainties.
Key Developments in Global Markets
Global equities remained under pressure as concerns over inflation, interest rates, and geopolitical risks persisted. European stocks bucked the trend, with the STOXX 600 index gaining 0.6% due to strong performance in energy stocks. However, U.S. Treasury yields remain elevated, with the 10-year benchmark yielding 4.563%, creating headwinds for equity valuations.
Outlook for the Day Ahead
The Indian stock market continues to navigate a complex mix of global and domestic factors. While certain sectors like energy and media are showing strength, concerns over IT and financials weigh on overall sentiment. Investors remain watchful of economic data releases, corporate earnings, and global cues for further direction.
The coming weeks will test the resilience of Indian equities, with market participants focusing on sectoral opportunities and stock-specific developments. Despite near-term challenges, the structural growth story of Indian markets remains intact, driven by a growing economy and favorable demographics.
