The Indian stock market closed lower for the second straight day as investors remained cautious ahead of the Reserve Bank of India’s (RBI) monetary policy meeting. The Sensex dropped 213.12 points (0.27%) to settle at 78,058.16, while the Nifty 50 lost 92.95 points (0.39%) to close at 23,603.35.
Despite a positive opening, the market erased early gains due to increased volatility, particularly in banking and realty stocks. Investors opted for a wait-and-watch approach as speculation grew over a potential 25 basis-point rate cut by the RBI.
Sectoral Performance: Divergence in Key Sectors
Realty and Banking Weigh on Markets
Nifty Realty Index saw a sharp decline, with major real estate stocks facing heavy selling:
Lodha Group: -4.55%
Godrej Properties: -2.23%
Oberoi Realty: -1.50%
Banking stocks also struggled despite strong earnings reports:
SBI and Axis Bank faced selling pressure.
Analysts cited global macro risks and pre-policy jitters as reasons for the downturn.
Pharma and IT Outperform
Amid the broader sell-off, pharmaceutical and IT stocks gained:
Cipla, Dr. Reddy’s, and HCL Technologies saw selective buying, reflecting defensive positioning by investors.
Pharma stocks gained traction due to expectations of strong Q3 earnings and global demand stability.
Key Stock Movements
1. SBI Reports Strong Q3 Earnings, But Stock Trades Flat
State Bank of India (SBI) posted an 85% YoY increase in net profit, reaching ₹16,891 crore.
Despite the robust results, SBI shares closed flat at ₹764.60 due to broader market weakness.
2. Sonata Software Returns to Profitability
The company reported a ₹105.01 crore net profit, reversing its losses from the previous year.
However, the stock ended flat at ₹551.60, as investors awaited further clarity on revenue growth.
3. Trent Falls Despite Strong Revenue Growth
Trent reported a 36% YoY increase in revenue, but net profit of ₹469 crore fell short of estimates (₹522 crore expected).
The stock reacted negatively, reflecting profit-taking after the earnings release.
4. MTNL Drops 9.27% as Credit Facilities Become NPAs
Mahanagar Telephone Nigam Ltd (MTNL) faced a sharp decline, closing at ₹50.88.
The stock was hit by concerns over its credit facilities being classified as non-performing assets (NPAs).
5. Emcure Pharmaceuticals Gains on Strong Earnings
Emcure Pharmaceuticals rose 2.66% to ₹1,283, following a 30% rise in Q3 net profit.
The stock saw buying interest due to positive earnings momentum in the pharma sector.
FII/DII Activity: Foreign Outflows Persist
Foreign Institutional Investors (FIIs) continued their selling spree, offloading stocks worth ₹3,549.95 crore.
Domestic Institutional Investors (DIIs) stepped in, making net purchases of ₹2,721.66 crore, offering some market support.
FII Derivatives Data showed heavy short positions in index futures, indicating ongoing caution in the market.
RBI Policy Meeting in Focus: Will There Be a Rate Cut?
With the RBI’s Monetary Policy Committee (MPC) meeting scheduled for February 7, the market is anxiously awaiting its decision.
Market Expectations:
A 25 basis-point rate cut is widely anticipated to support economic growth.
Post-budget optimism suggests that a rate cut could further boost investor sentiment.
However, global macro risks remain a concern, limiting aggressive market bets.
Expert Views:
Dr. VK Vijayakumar (Geojit Financial Services):
“A rate cut could provide a mild boost, but global macro risks linger.”
Market analysts believe that if the RBI keeps rates unchanged, banks and realty stocks could face further pressure.
Global and Domestic Market Cues
Asian Markets Show Mixed Trends
Hong Kong and Seoul ended higher, supported by strong corporate earnings.
European markets opened cautiously, tracking US bond yield movements.
Crude Oil Prices Edge Higher
Brent crude rose 0.12% to $74.70/barrel, supporting energy stocks like BPCL.
Oil prices remain volatile due to Middle East tensions and global demand concerns.
Currency Market: Rupee Faces Pressure
The Indian Rupee depreciated, adding complexity to the RBI’s policy decision.
Weakness in the rupee could impact import-heavy sectors, including automobiles and oil refiners.
Market Breadth and Derivatives Snapshot
Advance-Decline Ratio:
1,808 stocks advanced, while 2,103 stocks declined on the BSE, indicating bearish sentiment.
F&O Trends:
Maximum put writing at 23,500 for Nifty, suggesting strong support at this level.
Adani Ports, Axis Bank, and Infosys saw significant open interest buildup.
Expert Insights & Market Outlook
Vinod Nair (Geojit Financial Services)
“Market consolidation continues due to trade war uncertainties and pre-RBI caution.”
Prashanth Tapse (Mehta Equities)
“Corporate earnings, particularly from Bharti Airtel and ITC, will play a crucial role in shaping market sentiment.”
Conclusion: Investors Await RBI’s Decision
The market remains range-bound, with investors closely monitoring the RBI’s policy announcement.
Banking and realty stocks will likely be in focus depending on the rate decision.
Global cues and institutional flows will also play a key role in market movement in the coming sessions.
Stay tuned for further updates and expert analysis on market trends!
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