Sensex, Nifty end lower as RBI inflation outlook triggers profit booking

The S&P BSE Sensex lost 161.71 points to close at 81,467.10, while the NSE Nifty50 was down 31.20 points to end at 24,981.95.

In Short

• RBI's inflation projection affected investor sentiment
• Cipla led gainers; ITC suffered the largest loss
• Market volatility expected due to domestic, global challenges

Benchmark stock market indices closed lower on Wednesday, erasing gains made earlier in the day after investors booked profits following the RBI's projection for inflation.

The S&P BSE Sensex lost 161.71 points to close at 81,467.10, while the NSE Nifty50 was down 31.20 points to end at 24,981.95.

Vinod Nair, Head of Research, Geojit Financial Services said that an upward revision in Q3 FY25 inflation reiterates that the sticky inflation continues to remain a concern for the RBI and led investors to book profit towards the close.

"The volatility in input prices and the impact on margin dragged the FMCG stocks. The change in RBI's stance to neutral was favourable and expected, but the commentary is not pointing for a rate cut in the near term. Meanwhile, the investor’s sentiment is buoyed on the broad market taking opportunity on a stock-to-stock basis, to capitalise from the recent correction," he added.

Leading the gainers was Cipla, which saw a notable increase of 2.58%. Trent Limited followed closely with a rise of 2.34%, while Tata Motors gained 2.09%. State Bank of India also performed well, climbing 1.84%, and Tech Mahindra rounded out the top gainers with a 1.77% increase.

On the flip side, several stocks faced significant declines. ITC experienced the steepest drop, falling by 3.04%. Nestle India was also hit hard, declining by 2.44%. Oil and Natural Gas Corporation (ONGC) saw a decrease of 1.69%, while Reliance Industries fell by 1.67%. Hindustan Unilever Limited completed the list of top losers with a drop of 1.45%.

Ajit Mishra – SVP, Research, Religare Broking Ltd said that markets traded in a volatile manner and ended nearly flat, continuing the current corrective phase.

"While the session started on a positive note, selling pressure in select heavyweight stocks wiped out early gains as the day went on. The MPC meeting results were largely as expected, so they didn't spark much reaction in the market. Sectoral performance was mixed, with realty and pharma stocks rising, while FMCG and energy sectors saw declines. Interestingly, despite the volatility, broader indices outperformed, gaining between 1% and 1.3%," he added.

The real estate sector led the gains, with Nifty Realty surging by 2.15%. The healthcare sector also performed strongly, with Nifty Healthcare Index rising 1.85% and Nifty Midsmall Healthcare increasing by 1.57%. Nifty Pharma showed significant strength, gaining 2.04%.

Other sectors also saw notable gains. Nifty Auto rose by 0.82%, while Nifty Media climbed 0.83%. Nifty IT increased by 0.55%, and Nifty Financial Services saw a rise of 0.40%. Nifty Financial Services 25/50 gained 0.75%, Nifty PSU Bank went up by 0.66%, and Nifty Consumer Durables increased by 0.61%. Nifty Metal showed a modest gain of 0.06%.

On the downside, a few sectors faced declines. Nifty FMCG experienced the steepest drop, falling by 1.57%. Nifty Oil & Gas also retreated, declining by 0.67%. Nifty Bank and Nifty Private Bank saw minimal losses of 0.03% and 0.02% respectively.

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. On a positive note, the strength in IT and pharma stocks is encouraging, but traders should remain cautious during this corrective phase and adopt a hedged strategy.