Volatility Marks Indian Stock Market's Pre-Holiday Decline

The Indian stock markets closed lower after a volatile session on Tuesday, with Nifty and Sensex both declining. Gains were observed in auto, FMCG, and pharma sectors, while metal and power stocks lagged. Analysts cite the strong dollar and high US bond yields as primary concerns affecting market sentiment.

In a tumultuous trading session on Tuesday, the Indian stock markets faltered, unable to maintain the opening gains. By the end of the day, the Nifty 50 had slipped to 23,727.65, marking a decline of 25.80 points or 0.11 percent. Meanwhile, the Sensex dropped by 67.30 points, closing at 78,472.87, a decrease of 0.09 percent.

Notably, Tata Motors, Adani Enterprises, Eicher Motors, BPCL, and ITC emerged as top gainers on the National Stock Exchange, while Power Grid Corp, JSW Steel, SBI Life Insurance, IndusInd Bank, and Grasim Industries were among the major losers. The session saw increased buying in the auto, FMCG, oil and gas, pharma, and realty sectors, whereas IT, media, metal, and PSU Bank sectors recorded losses, with declines of up to 0.83 percent.

The BSE midcap index remained stable, while the smallcap index posted a modest increase of 0.3 percent. Of the Nifty50 constituents, 28 stocks ended in the red, with significant drops in Power Grid Corporation and others. Broader market performance was mixed, with Nifty Smallcap 100 gaining 0.24 percent and Nifty Midcap 100 dipping 0.06 percent.

Experts attribute the market's shaky performance to two major external factors: a robust dollar and elevated bond yields in the US, which are incentivizing Foreign Institutional Investors (FIIs) to sell during market rallies. Analysts anticipate limited prospects for a near-term rally, advising investors to emphasize safety over returns. Looking ahead, the trajectory of the market remains contingent on upcoming Q3 results and the Union budget. Concerns persist over exchange rates and bond yields, highlighted by the Indian rupee's historic low, according to Vinod Nair, Head of Research at Geojit Financial Services.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, remarked that the temporary relief seen in the markets is unlikely to persist. He identified external factors, such as the strong dollar and high bond yields, alongside internal challenges like growth and earnings slowdowns as constraints on a sustained rally.

Investment strategies should prioritize safety, focusing on reasonably valued segments like large-cap financials and stable sectors such as pharma and IT, which are expected to endure amidst the current macroeconomic pressures. VLA Ambala of Stock Market Today noted weak sentiment in markets while suggesting potential opportunities might arise soon.

In observance of Christmas, stock exchanges will remain closed on December 25, 2024. (ANI)

(With inputs from agencies.)