Equity benchmarks declined on Friday, reversing gains from their best session in six weeks, as selling pressure emerged in IT and banking stocks amid concerns over global trade policies and domestic valuations.
The BSESensex fell 720.60 points or 0.90 per cent to close at 79,223.11, while the Nifty 50 dropped 183.90 points or 0.76 per cent to end at 24,004.75. The Bank Nifty witnessed significant pressure, declining 616.75 points or 1.20 per cent to 50,988.80.
The Rupee also depreciated four paise to close at a record low of 85.79 (provisional) against the U.S. dollar on Friday (January 3, 2025), as strong dollar demand from importers and a muted trend in domestic equities weighed on investors’ sentiments.
“Despite the short recovery in the past two sessions, markets lost the momentum as there is still a lot of pessimism due to slowing growth, higher domestic valuations, foreign fund outflows and uncertainty over US trade policies post Trump’s resumption as the country’s president,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Market breadth remained slightly positive with 2,032 shares advancing against 1,965 declines. The session saw 199 stocks hitting 52-week highs, while 23 touched their 52-week lows. Two stocks hit the lower circuit, while none reached the upper circuit limit.
FIIs/FPIs recorded a net inflow of ₹1,506.75 crore, while DIIs registered a marginal net inflow of ₹22.14 crore. Clients saw a net outflow of ₹445.78 crore, NRIs recorded a net inflow of ₹6.19 crore, and proprietary traders contributed a net inflow of ₹531.15 crore.
“The markets took a pause after a three-day rally… This pullback appears to be a normal pause following the recent recovery and could persist until the Nifty decisively crosses the next resistance at 24,250,” said Ajit Mishra, SVP, Research, Religare Broking Ltd.
The India VIX, which measures market volatility, showed signs of stabilisation. Sectoral performance was mixed, with media and energy sectors gaining while IT and pharma sectors declined.
Looking ahead, market participants are awaiting the First Advance Estimates of Annual GDP for FY 2024-25, scheduled for release on January 7, 2025, which could influence market sentiment ahead of the Union Budget.
“The Nifty-50 Index and Sensex each gained 1 per cent in the past week. Both the mid-cap index and small-cap index gained around 1.5 per cent outperforming large-caps,” noted Shrikant Chouhan, Head Equity Research, Kotak Securities.
“Bears back in action. Markets retreated from their recent recovery momentum… Trading activity remained robust, with NSE cash market volumes increasing 7 per cent compared to the previous day,” said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.
