Market Takes Breather After Record Rally
India's equity benchmarks showed minimal movement on Friday, hovering close to the unprecedented peaks achieved during the previous trading session. The cautious sentiment prevailed as market participants adopted a wait-and-watch approach before the release of crucial quarterly economic growth figures scheduled later in the day.
The Nifty index registered a modest increase of 0.05% to reach 26,229.25 points, while the Sensex climbed 0.08% to 85,784.49 points as of 10:19 a.m. Indian Standard Time. Both indices had demonstrated stronger upward momentum earlier in the session, gaining up to 0.2%, but failed to maintain these levels as trading progressed.
Record Highs and Profit Booking
This restrained performance follows Thursday's remarkable achievement when both benchmarks scaled unprecedented heights. The Nifty surged to an all-time high of 26,310.45 points, representing a 0.4% intraday gain, while the Sensex reached 86,055.86 points, marking a 0.5% increase during the session. However, both indices concluded the day with minimal changes as foreign institutional investors capitalized on the rally to secure profits.
Market breadth revealed a mixed picture with nine out of sixteen major sectors recording gains. The broader market segments, however, witnessed some pressure with the small-cap index declining 0.3% and mid-caps dropping 0.1%.
Investor Behavior and Economic Outlook
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted a concerning trend in retail investor behavior. "Despite the market achieving new highs, the majority of retail investors find themselves facing losses," he observed. "This paradox stems from their overwhelming focus on small-cap stocks and the persistent belief that these will outperform regardless of valuation concerns."
The market's underlying weakness was further evidenced by the advance-decline ratio on both Bombay Stock Exchange and National Stock Exchange remaining below 1, indicating that declining stocks outnumbered advancing ones across the market spectrum.
Analysts suggested that widespread profit-taking could continue until the economic growth data release. According to a Reuters survey, India's economy likely maintained its resilience during the July-September quarter, with gross domestic product growth projected at 7.3%. This robust performance is attributed to sustained consumer demand and accelerated production and export activities ahead of anticipated U.S. tariff implementations.
Notable Stock Movements
Individual stocks displayed varied performances with several notable movements:
Mahindra & Mahindra witnessed a 1.8% increase, contributing to the 0.6% rise in the auto index. This upward movement followed Nomura identifying the company as its preferred sector choice, citing optimistic expectations for its new electric SUV's future performance.
In contrast, GAIL (India) Limited experienced a significant 5.2% decline after the petroleum and natural gas regulatory authority approved a 12% transmission tariff increase, substantially lower than the company's anticipated 20% hike.
Ashoka Buildcon faced a 3% drop after the National Highways Authority of India imposed a temporary suspension on the company's bidding privileges. This disciplinary action follows the collapse of two pre-cast girders on NH-66, which resulted in one fatality. The suspension will remain effective for one month or until the completion of the investigation.
The market eagerly anticipates the GDP data release scheduled after trading hours on Friday, which is expected to provide crucial direction for future investment decisions and market trajectory.
