Stock Market Today: Nifty 50, Sensex retreat from record highs, broader markets fare poorly

The Indian market’s reaction to the US Federal Reserve’s 50 basis point rate cut on Wednesday was relatively muted compared to its global and Asian peers. Instead of celebrating the move, Indian investors opted to book profits in Thursday’s trade, resulting in only modest gains for frontline indices.

The trading day started on a positive note with interest rate cuts fuelling optimism. This led to the Nifty 50 crossing the 25,600-level to hit a record high of 25,611 points. Similarly, the S&P BSE Sensex also achieved a milestone by crossing the 83,700-level to hit a new high of 83,773 points.

However, as the day progressed, both the indices started giving up their earlier gains. The decline was mainly due to losses in the PSU, telecom and IT sectors. While banking stocks maintained their upward trajectory for the second consecutive day and FMCG stocks provided some support, it was not enough to push the indices higher.

The Nifty 50 closed the session up by a small 0.15 per cent to end at 25,415 points. The S&P BSE Sensex ended the session up by 0.29 per cent to end at 83,184 points. Out of the 50 Nifty components, 29 stocks ended the session in the red.

NTPC was the top gainer on the index with a gain of 2.3 per cent. Other notable gainers included Kotak Mahindra Bank, Titan Company, Hindustan Unilever (HUL), Nestle India, Tata Consumer Products, Maruti Suzuki India and Bajaj Auto, all of which rose between 0.8 per cent and 1.7 per cent.

Experts suggest that markets have already factored in the aggressive rate cut by the US Federal Reserve, which capped the rally in today’s session. Amit Golia, Group CEO, MarketsMojo, said, “Nifty 50 is up 2.1 per cent in the last 10 days on the anticipation of a rate cut, though market activity remained relatively flat today and early excitement faded in the afternoon.”

“This suggests that markets may have already priced in a rate cut and are waiting for more cues. In addition, oil prices are at 52-week lows, and basic metals such as iron ore and steel are hovering near multi-year lows — clear indicators of a slowdown in the global economy.”

“Looking ahead, markets may focus on how rate cuts will impact corporate earnings and the broader economy, especially if global demand continues to weaken,” Golia added.

Mid- and small-cap stocks face significant stress

Mid-cap and small-cap stocks suffered heavy losses in Thursday’s session, with the Nifty Midcap 100 index falling 0.71 per cent to fall below the 60,000-mark, settling at 59,351 points. At one point, the index fell 2.3 per cent but later recovered towards the end of the session.

The Nifty SmallCap 100 index also lost much more as it ended the session with a loss of 1.26 per cent or 19,144 points.

Commenting on today’s sharp fall in mid and small cap stocks, Santosh Meena, Head of Research at Swastika Investmart, said, “The mid and small cap segments, especially sectors like defence, railways and capital goods, which were doing exceptionally well in the last 2-3 years, are now witnessing a sharp correction.”

“Valuations have long been a concern in the broader market, but these stocks have continued to rise despite being considered expensive. However, there comes a time when market euphoria fades. Domestic institutions have also shown caution by keeping significant cash reserves at elevated levels. I believe this correction could extend further, presenting a strong opportunity to buy quality stocks for long-term investors,” Meena added.

Nifty Bank ends above 53,000, approaching all-time high

The Nifty Bank index closed above the 53,000-point mark for the second time in 2024, approaching its all-time high of 53,357 points set on July 4. Today’s peak touched 53,353 points before settling at 53,037 points, up 0.54 per cent during the session.

The rally, which follows the index’s strong performance for two consecutive days, was driven by significant gains in major banking stocks, with AU Small Finance Bank (AU SFB), IDFC First Bank and Kotak Mahindra Bank all climbing 1.4 per cent to 3.9 per cent.

Of the 12 components of the index, eight ended the day in positive territory. The index is now up 3.28 percent in September, its biggest monthly gain since June.

Vinod Nair, Head of Research at Geojit Financial Services, said, “Benchmark indices ended the session on a modest note, hitting record highs after the US Federal Reserve cut interest rates by 50 basis points, beating expectations and hinting at a further cut.

“The significant rate cut triggered fears of a global slowdown, leading to profit-taking in mid- and small-cap stocks trading at a premium. Meanwhile, heavy domestic sectors like banking and FMCG saw buying interest, driven by foreign investor inflows and expected monetary policy easing by the RBI in October,” he noted.

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