Markets pare early gains

Mumbai: Equity benchmark indices Sensex and Nifty buckled under selling pressure to settle nearly one per cent lower on Friday as investors pared exposure to bank and IT stocks ahead of the earnings season starting next week. A depreciating rupee against strengthening US dollar overseas further weighed on sentiment, traders said.

Despite a positive start, the 30-share BSE Sensex tumbled 720.60 points or 0.90 per cent to close at 79,223.11. During the day, it slumped 833.98 points or 1.04 per cent to 79,109.73. The NSE Nifty tanked 183.90 points or 0.76 per cent to 24,004.75. On a weekly basis, the BSE benchmark jumped 524.04 points or 0.66 per cent, and the Nifty climbed 191.35 points or 0.80 per cent. The market capitalisation (mcap) of BSE-listed companies fell by Rs0.69 lakh crore to Rs4,49,78,130.12 cr (Rs449.78 lakh cr or $5.24 trn).

“A sell-on-rally sentiment prevails in the market due to a strong US dollar, high valuation, and a shift towards a multi-asset investment strategy. Reducing US jobless claims and potential policy shifts in the US indicate that the Fed is not in a hurry to cut interest rates in the near term. “Looking ahead, the market is likely to focus on Q3 earnings, with expectations of improvement in earnings on a QoQ basis,” Vinod Nair, head (research), Geojit Financial Services.

The BSE midcap gauge fell 0.33 per cent, and smallcap index dipped 0.02 per cent.

“Despite the short recovery in the past two sessions, markets lost the momentum as there is still a lot of pessimism due to slowing growth, higher domestic valuations, foreign fund outflows, and uncertainty over US trade policies post Trump's resumption as the country's president. Hence, markets may see bouts of correction, and investors will continue to maintain caution while keeping an eye on global developments,” Prashanth Tapse, senior V-P (research), Mehta Equities Ltd, said.

Among sectoral indices, BSE Focused IT declined 1.42 per cent, IT (1.31 per cent), teck (1.13 per cent), bankex (1.07 per cent), capital goods (1.06 per cent) and financial services (0.87 per cent).

“In the near term, we expect markets to witness stock/sector specific action on the back of pre-quarterly business updates released by companies, ahead of their Q3 results,” added Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd.

“Reflecting on 2024, the year emphasised the importance of discipline over speculation. Despite pockets of volatility, markets did not see dramatic deviations. As broad-based rallies give way to more selective opportunities, the focus will shift to individual stock picks. Moving forward, staying disciplined about valuations and adhering to well-defined strategies will be crucial in navigating the ever-changing market landscape,” Krishna Appala, Senior Research Analyst, Capitalmind Research, said.