Profit-taking erodes intraday gains in markets; Sensex rises 130 points

Indian markets ended flat after early gains on optimism over an Indo-US trade deal and strong earnings, as profit-taking capped the rally despite IT stocks' rise

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Domestic equity benchmarks extended gains for a sixth straight session on Thursday, with the Nifty briefly crossing the 26,000-mark after a year, driven by optimism over a potential trade deal with the US and upbeat corporate earnings for the July–September quarter. However, profit-taking erased much of the day’s advance, leaving the indices with modest gains when the markets closed. 

The Sensex rose 1.02 per cent intraday before settling at 84,556 — up 130 points, or 0.2 per cent. The Nifty crossed 26,000 for the first time since September 30, 2024, but ended at 25,891, up 23 points, or 0.09 per cent. Both indices have added around 3 per cent over the past six sessions. However, the rally lacked breadth with 2,464 stocks declining against 1,809 advancing on BSE. 

The total market capitalisation of BSE-listed firms slipped by ₹60,000 crore to ₹470 trillion. Investor wealth rose by ₹10.6 trillion over the past six sessions, while the benchmark indices were only 1.5 per cent shy of new lifetime highs. 

Market sentiment was buoyed by reports suggesting that the US may lower tariffs on Indian exports to 15–16 per cent from 50 per cent currently. The news sent textile stocks soaring. Reports also indicated that India could agree to cut imports of Russian oil and allow non-genetically modified corn and soymeal from the US. 

The recent market gains have been supported by strong quarterly updates from several companies, though the uncertainty around the US trade deal and stretched valuations have often triggered profit-taking at higher levels. 

“There is nothing concrete yet to suggest that a deal has been finalised. Moreover, once Nifty crosses 26,000, valuations start looking expensive. Earnings expectations are modest, so even slightly better results lift sentiment. The current rally appears news-driven rather than earnings-led, and valuations remain unjustified even if upcoming earnings mirror the early results. Hence, profit-booking is expected whenever there’s a gap-up opening,” said Ambareesh Baliga, independent equity analyst. 

Going ahead, market direction is likely to be shaped by corporate earnings and developments around the India-US trade talks. 

“The index’s price structure points to a possible short-term consolidation after the sharp up move, which would be healthy as long as Nifty holds above 25,600. The index still has potential to retest its record highs soon. However, traders should watch for overbought conditions in certain pockets and look for opportunities through sectoral rotation,” said Ajit Mishra, SVP–Research, Religare Broking. 

Among Sensex constituents, Infosys was the top performer, rallying 3.9 per cent, followed by HCL Technologies which rose 2.4 per cent and TCS. which gained 2.2 per cent. 

Experts said IT stocks’ outperformance was driven by hopes that a trade deal with the US would benefit the sector, which derives a significant share of revenue from overseas business. 

Meanwhile, Brent crude climbed 2.6 per cent to $65 a barrel after the US imposed sanctions on Russian oil majors Rosneft and Lukoil  as part of efforts to pressure Moscow to end the war in Ukraine. 

Foreign Portfolio Investors (FPIs) were net sellers of Rs 1,166 crore, while domestic institutions were net buyers of Rs 3,894 crore.