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Markets catch their breath after record highs; Sensex closes at 79,925

Sharp rebound from election-result day lows is being driven by hopes of policy continuity, foreign portfolio investors (FPIs) turning net buyers again, and strong macroeconomic numbers

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Sundar Sethuraman Mumbai

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Benchmark indices ended Wednesday’s session with losses after hitting new highs earlier in the day, amid a sharp decline in Mahindra & Mahindra (M&M) and heavyweights in information technology and banking sectors.

The Sensex hit an intraday high at 80,481 but ended the session at 79,925, with a decline of 427 points, or 0.5 per cent. The National Stock Exchange Nifty ended the session at 24,325, a decline of 109 points, or 0.5 per cent. Both indices hit new highs during the day.

M&M contributed the most to the Sensex’s decline. The automobile (auto) manufacturer posted its biggest single-day fall since April 21, 2020, after slashing prices for some of its sport utility vehicle (SUV) variants.

M&M had cut the price of its AX7 range of SUVs by Rs 2 lakh. The price cut had led to murmurs about unsold inventories of automakers. In an exchange filing, the company dismissed concerns about unsold inventory and said the price cut was a continuation of its business strategy execution.


Some profit booking was due to concerns ahead of the beginning of the corporate results season, and markets have run ahead of the Budget this month. The elevated valuations of Indian equities are also weighing on investors’ minds.

Analysts said the expectations are muted this time amid moderation in sales. There are concerns about whether the earnings will justify the stock prices, which have rallied sharply.

Indian equity markets have been hitting new highs amid optimism around the economic outlook. In an earlier session, the Sensex had finished at a new record high for the 13th time since June 4, when the index had plunged 6 per cent following the disappointing election outcome.

The sharp rebound from election-result day lows is being driven by hopes of policy continuity, foreign portfolio investors turning net buyers again, and strong macroeconomic numbers.

“The Indian market experienced profit booking ahead of the upcoming earnings season. The expectations are muted, given the moderation in sales growth due to a slowdown in the world economy and consolidation in margins driven by high inflation. Additionally, the market is under temporary risk towards high Budget expectations, which appear well factored in last month’s rally. Broader indices lagged behind largecaps and the fast-moving consumer goods sector, which are expected to drive momentum going ahead due to stable business outlook,” said Vinod Nair, head of research of Geojit Financial Services.

The corporate results and the Budget will determine the market trajectory going forward.

“We are of the view that Wednesday’s low or 24,150/79,400 would act as a key support zone for the day traders. If the index succeeds in trading above the same, then it could retest the level of 24,450/80,500. Further upside may also continue, which could lift the index to 24,500-24,550/80,700-80,900. On the flip side, below 24,150/79,400, selling pressure is likely to accelerate. Below which the market could slip till 24,050-24,000/79,100-78,800,” said Shrikant Chouhan, head of equity research at Kotak Securities.

The market breadth was weak, with 2,612 stocks declining and 1,326 advancing. More than two-thirds of Sensex stocks declined. The India Vix, a gauge of market volatility, closed at 14.43, its highest level since June 11.

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First Published: Jul 10 2024 | 10:24 PM IST

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