Markets reverse Muhurat day gains, heavyweights drag down benchmark indices

Most global markets traded mixed as traders eyed key events such as talks between the US and China and the release of US inflation data

Domestic equities fell by half a per cent on Monday, reversing most of the gains made during the special muhurat session the day before.

A decline in index heavyweights, such as HDFC Bank and Reliance Industries (RIL), coupled with caution in global markets, weighed on the overall performance.

The S&P BSE Sensex fell by 326 points, or 0.5 per cent, closing the session at 64,934, while the National Stock Exchange Nifty50 index dropped by 82 points, or 0.42 per cent, concluding the session at 19,443.

Most global markets traded mixed as traders kept an eye on key events, such as talks between the US and China and the release of US inflation data.

Market players mentioned that the lack of participation from domestic investors amid festivities also impacted sentiment.

The domestic markets are closed on Tuesday for a holiday.

Meanwhile, India’s industrial output growth slowed in September after reaching a 14-month high in the previous month, indicating a slowdown in demand.

The Index of Industrial Production (IIP) rose by 5.8 per cent in September, down from 10.3 per cent in August. IIP growth from April to September shrank to 6 per cent from 7.1 per cent during the same period the previous year.

“The sharp deceleration in IIP growth reflects global trends driven by rising interest rates and inflation. The weakness of the Indian rupee is keeping foreign portfolio investors cautious,” said Vinod Nair, head of research at Geojit Financial Services.

Analysts said the current environment is ‘tricky’ for investors, as the macroeconomic (macro) backdrop is likely to be defined by moderating growth. Elevated interest rates, a stronger dollar, political and geopolitical uncertainty, and China’s continuing macro challenges will be some of the key headwinds in the near term.

However, the downside for the Indian market could be protected by strong earnings, economic stability, and domestic institutional flows, said an expert.

In the near term, the market could be determined by macro data from the US and China and statements from monetary policy officials, which will raise some questions about the future of rate hikes.

“Indian equities were muted after the strong gains witnessed during the first session of Samvat 2080 on Diwali on Sunday. This was largely due to the absence of domestic participation amid festive vibes and the market holiday on Tuesday. In this truncated trading week, we expect the market to consolidate in a broader range with the second-quarter earnings season coming to an end," said Siddhartha Khemka, head of research (retail) at Motilal Oswal Financial Services.

The market breadth was mixed, with 2,098 stocks declining and 1,732 advancing. More than two-thirds of Sensex stocks fell. HDFC Bank fell by 0.7 per cent and contributed the most to the Sensex’s decline. Shares of RIL fell by 0.7 per cent. Among BSE’s 19 sectoral indices, the IT index fell the most at 0.8 per cent.