Market closes mixed as RBI holds rates; FMCG stocks drag Sensex lower

The Indian stock market ended on a mixed note on Wednesday, October 9, 2024, with the BSE Sensex closing lower while the Nifty 50 managed to hold above the 24,900 mark. The benchmark Sensex closed at 81,467.10, down 167.71 points or 0.21 per cent, while the Nifty 50 ended at 24,981.95, shedding 31.20 points or 0.12 per cent.

The day’s trading session was characterized by volatility as investors digested the Reserve Bank of India’s (RBI) monetary policy decision to maintain the repo rate at 6.5 per cent for the tenth consecutive meeting. The central bank also shifted its stance to neutral from the withdrawal of accommodation, signalling a potential rate cut in the future.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, commented on the day’s market action: “Today, the benchmark indices witnessed profit booking at higher levels. Technically, after early morning rally, the market took resistance near 25200/82300 and due to intraday profit booking in the second half of the day, it corrected sharply.”

Sectoral performance was mixed, with Realty and Pharma indices rallying over 2 per cent, while the FMCG index was the top loser, shedding over 1.5 per cent. Among the Nifty 50 constituents, Cipla led the gainers, surging 2.58 per cent, followed by Trent (2.34 per cent), Tata Motors (2.09 per cent), SBI (1.84 per cent), and Tech Mahindra (1.77 per cent).

On the flip side, ITC was the biggest loser, plummeting 3.04 per cent, followed by Nestle India (-2.44 per cent), ONGC (-1.69 per cent), Reliance (-1.67 per cent), and Hindustan Unilever (-1.45 per cent). The steep decline in FMCG stocks weighed heavily on the Sensex’s performance.

Among Sensex stocks on the BSE, Tata Motors emerged as the top performer, gaining 2.10 per cent. Following closely were SBI, up 1.91 per cent, Tech Mahindra, which climbed 1.86 per cent, and Maruti, rising 1.80 per cent. Bajaj Finserv also increased, ending the day 1.65 per cent higher. On the losing side, IndusInd Bank declined by 1.34 per cent, while Reliance fell 1.64 per cent. Hindustan Unilever (HUL) decreased by 1.68 per cent, Nestle India slipped 2.51 per cent, and ITC recorded the steepest decline, closing 3.17 per cent lower.

Market breadth remained positive, with 2,705 stocks advancing and 1,248 declining on the BSE. A total of 184 stocks hit their 52-week highs, while 32 touched their 52-week lows.

Ameya Ranadive, Sr Technical Analyst at StoxBox, noted: “The Indian frontline indices were trading largely flat today as RBI governor Shaktikanta Das announced that the RBI MPC has decided to hold rates at 6.5 per cent. After the decision, the market experienced a surge but could not sustain the momentum, ending the day on a flattish note.”

In the broader market, the Nifty Next 50 index outperformed, gaining 1.09 per cent to close at 75,407.80. The Nifty Midcap Select index also showed strength, rising 0.77 per cent to 12,974.35.

Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, commented: “Markets lost ground in the second half and slipped into the red on selective profit-taking as investors resorted to caution in the run up to the start of the second quarter earnings season.”

Foreign portfolio investors (FPIs) were net sellers, with a sell value of ₹20,503.79 crore against a buy value of ₹14,774.19 crore, resulting in a net outflow of ₹5,729.60 crore. In contrast, domestic institutional investors (DIIs) recorded a net inflow of ₹7,000.68 crore, as their buy value stood at ₹19,494.71 crore while their sell value was ₹12,494.03 crore on the same day. Clients, Non-Resident Indians (NRIs), and Proprietary traders also exhibited varied trading patterns, with notable activity in proprietary trading, showing a net inflow of ₹237.75 crore.

The volatility index, India VIX, cooled off by 3.44 per cent, settling at 14.09, indicating a drop in market volatility.

Ajit Mishra, SVP of Research at Religare Broking Ltd, cautioned: “Markets are grappling with challenges both domestically and globally, and the upcoming earnings season may increase volatility. As expected, Nifty struggled to break through the resistance zone of 25,150-25,300, and a breach of the recent low near 24,700 could trigger a fresh downward move.”

Looking ahead, market participants will closely monitor the upcoming earnings season for cues on corporate performance and economic recovery. The mixed closing on Wednesday reflects the cautious sentiment prevailing in the market, with investors weighing the potential impact of global factors and domestic economic indicators on stock valuations.