Mumbai: The Indian stock market turned cautious on Monday, with benchmark indices Sensex and Nifty slipping into negative territory in early trade after initially opening higher. Selling pressure in information technology, automobile and consumer-facing stocks weighed on the benchmarks, while banking and pharmaceutical shares offered some support.

At around 9:27 am, the BSE Sensex was trading at 80,899.94, down 99.46 points or 0.12% from its previous close of 80,999.40. The index had opened at 81,327.29 and touched an early high of 81,339.41 before declining to a low of 80,714.05.

The NSE Nifty 50 was down 17.10 points or 0.07% at 24,969.30. It opened at 25,076.40, moved up to an early high of 25,084.05 and subsequently fell to 24,897.85.

The decline came after a strong rally in the previous week, when renewed foreign investor buying and improving market sentiment supported Indian equities. Investors were assessing global developments, crude oil prices and the sustainability of recent foreign fund inflows.

Most Sensex stocks trade in the red

Selling pressure was visible across several heavyweight stocks, with technology, automobile and consumer-facing companies among the major laggards.

HCL Technologies was the biggest Sensex loser, falling 1.44%. Power Grid declined 1.34%, while Bharti Airtel slipped 1.16%. Bajaj Finance dropped 1.11% and Tata Steel lost 1.03%.

Among information technology stocks, Infosys declined 0.99% and Tata Consultancy Services (TCS) fell 0.77%. UltraTech Cement was down 0.93%, ITC slipped 0.83% and Asian Paints declined 0.81%.

Maruti Suzuki lost 0.72%, while Adani Ports fell 0.64%. Reliance Industries, Titan, Eternal, Bajaj Finserv, Hindustan Unilever, Bharat Electronics, Trent, NTPC, Axis Bank, Tech Mahindra, Kotak Mahindra Bank and Mahindra & Mahindra were also trading lower.

However, a handful of heavyweight stocks limited the overall decline. State Bank of India (SBI) was the top Sensex gainer, rising 1.39%. HDFC Bank advanced 1.17%, while ICICI Bank gained 1.07%.

Sun Pharmaceutical Industries rose 0.69%, IndiGo gained 0.55% and Larsen & Toubro was up 0.20%.

The broader market also remained subdued. The Nifty 100 was flat, while the Nifty 200 declined 0.04% and the Nifty 500 slipped 0.07%.

The Nifty Midcap 50 fell 0.14%, while the Nifty Midcap 100 declined 0.17%. The Nifty Smallcap 100 was down 0.05%.

Meanwhile, India VIX, which measures expected market volatility, declined 2.25% to 18.02.

Banking and pharma stocks offer support

Sectoral indices reflected a mixed market trend, with pharmaceutical and banking shares performing relatively well even as technology, realty and automobile stocks faced selling pressure.

The Nifty Pharma index was among the strongest performers, rising 1.51%. The Nifty Healthcare index gained 1.24%, while the Nifty PSU Bank index advanced 1%.

The Nifty Financial Services 25/50 index rose 0.40%, and the Nifty Private Bank index gained 0.28%. The Nifty Media index was also in positive territory, rising 0.65%.

On the other hand, the Nifty IT index declined 0.80%, reflecting weakness in major technology stocks. The Nifty Realty index fell 0.60%, while the Nifty FMCG index slipped 0.43%.

The Nifty Metal index declined 0.41% and the Nifty Auto index lost 0.35%. The Nifty Consumer Durables index was down 0.26%, while the Nifty Financial Services ex-Bank index slipped 0.25%.

The Nifty MidSmall IT & Telecom index recorded a sharper decline of 0.87%. The Nifty MidSmall Financial Services index fell 0.16%, while the Nifty Chemicals index slipped 0.17%.

In contrast, the Nifty MidSmall Healthcare index gained 1.19%, indicating continued buying interest in healthcare-related stocks.

What is driving market sentiment?

The market’s early weakness followed a strong performance in the previous week. The Nifty had gained 8.6% during the week, supported by renewed foreign institutional investor buying, relatively attractive valuations, easing crude oil prices, lower US bond yields and improving corporate earnings.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, attributed the rally to a combination of favourable developments for Indian equities.

He highlighted foreign institutional investors turning aggressive buyers, reasonable valuations, a reduction in the intensity of the artificial intelligence (AI) investment trade, lower crude prices, declining US bond yields and improving corporate earnings reflected in second-quarter results.

According to Vijayakumar, the combination of these factors created favourable conditions for a market recovery.

“When the situation turns favourable, the market needs only a trigger to rally,” he said.

He added that the Democrats’ victory in the US elections had provided a trigger by raising concerns about a possible slowdown in AI spending and contributing to a sharp correction in AI-related stocks.

Vijayakumar expects foreign institutional investor buying in India to continue, potentially supporting further gains in large-cap stocks. However, he also noted that foreign investor allocations generally tend to follow index weights during significant market shifts.

Crude oil prices remain in focus

Crude oil prices showed a mixed trend in early trade, leaving investors attentive to movements in the global energy market.

US West Texas Intermediate (WTI) crude futures were trading at $91.11 per barrel, up $0.28 or 0.31%. Brent crude futures, meanwhile, declined by $0.19 or 0.19% to $98.13 per barrel.

Oil prices remain an important factor for Indian markets because India depends heavily on imported crude. A sustained increase in global oil prices can raise import costs and create pressure on inflation, the rupee and corporate margins.

Investors are also monitoring foreign institutional investor activity, currency movements and developments in international equity markets.

Investors watch for direction through the session

Monday’s early movement suggested that investors were booking profits in select heavyweight stocks after the previous week’s strong gains. However, buying in banking and pharmaceutical shares indicated that the weakness was not uniform across sectors.

The Nifty’s move below the 25,000 mark and the Sensex’s retreat from its opening levels will remain key points of attention for market participants.

The direction of crude oil prices, foreign fund flows, the rupee and global technology stocks could influence trading sentiment through the session. With the broader market showing limited movement, investors are likely to remain selective while assessing whether the recent rally can sustain its momentum.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the News Karnataka Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)