The Indian equity benchmarks concluded a volatile trading session on Wednesday, June 5, 2024, deep in the red, marking their fourth straight day of decline. Persistent selling pressure across multiple sectors, coupled with weak global cues, dragged the indices lower, erasing investor wealth.
A Detailed Look at the Market Performance
The benchmark S&P BSE Sensex ended the day at 78,571.43, registering a significant fall of 345.53 points or 0.44%. The index witnessed an intraday swing, touching a high of 78,837.88 and a low of 78,446.59 before settling near the day's low. The broader Nifty 50 mirrored the weakness, closing at 23,867.55, down by 113.80 points or 0.47%.
This sustained downturn has pushed the market into a phase of consolidation and profit-booking after a record-breaking rally. The decline was broad-based, with several heavyweight stocks contributing to the fall. The overall market breadth remained negative, indicating widespread selling pressure beyond just the index constituents.
Key Factors Driving the Market Sell-Off
Analysts point to a confluence of domestic and global factors behind the extended correction. Weakness in Asian and European markets set a negative tone for the trading day. Investors globally are exhibiting caution ahead of key economic data releases and central bank policy decisions in major economies.
On the domestic front, the market is also digesting the outcome of the recent Lok Sabha elections and awaiting cues from the upcoming Union Budget and the policies of the new coalition government. This has led to a "wait-and-watch" attitude among many institutional and retail participants, reducing buying momentum.
Sectoral Performance and Stock-Specific Action
The sectoral landscape painted a bleak picture. The Nifty Bank index, a crucial barometer for financial stocks, underperformed the main index, dropping by 0.56%. Other major laggards included the Nifty Financial Services, Metal, and Realty indices. The sell-off was particularly pronounced in public sector undertaking (PSU) banks and some automobile stocks.
However, not all sectors faced the heat. The Nifty IT index managed to close in positive territory, gaining 0.33%, as the Indian rupee weakened against the US dollar, providing some tailwind for export-oriented technology companies. The Nifty Pharma index also showed resilience, ending marginally higher.
On the individual stock front, heavyweights like HDFC Bank, ICICI Bank, and Reliance Industries were among the top drags on the Sensex. In contrast, stocks like Sun Pharma, Infosys, and TCS offered some support, limiting further downside.
Market Outlook and Technical Analysis
Market experts suggest that the current phase is a healthy correction after a parabolic rise. They emphasize that the long-term structural story for Indian equities remains intact, driven by strong macroeconomic fundamentals, stable corporate earnings, and continued domestic institutional inflows.
From a technical perspective, the Nifty closing below the 23,900 level is seen as a near-term negative signal. Immediate support for the Nifty is now placed around the 23,750-23,800 zone. A breach below this level could trigger further selling. On the upside, resistance is seen at the 24,000 mark, which the index needs to reclaim convincingly to resume its upward trajectory.
Investors are advised to adopt a stock-specific approach in this volatile environment, focusing on companies with robust fundamentals and clear earnings visibility. The focus will now shift to global macroeconomic developments, monsoon progress, and domestic policy announcements for fresh directional cues.
