Closing Bell: Market Ends Lower For The 2nd Week, Sensex & Nifty Decline 3% In 2 Weeks; IT Drags

The Indian stock market witnessed a downturn on January 17, 2025, ending its three-day winning streak as the benchmark indices closed lower amidst sharp sell-offs in IT and banking counters. Despite support from heavyweights like Reliance Industries and select metal and pharma stocks, the market sentiment remained bearish, reflecting a mix of global and domestic pressures.

The benchmark Nifty 50 index dropped 109 points (-0.47%) to close at 23,203, while the Sensex fell 423 points (-0.54%) to settle at 76,619, reflecting a broad-based sell-off in the market. In contrast, the Nifty Midcap 100 outperformed with a modest gain of 0.23%, closing at 54,608, and the Nifty Smallcap 100 rose by 0.16% to end the session at 17,672.

"Despite decent Q3FY25 results from key index heavyweights, the market continues to reel under the pressure of high interest rates and a strong dollar. Technically, the BSE Sensex faces resistance at 77,379, and a breach of support at 76,335 could push it lower to 75,295," noted A.R. Ramachandran, an independent research analyst.

The Nifty IT index emerged as the top sectoral loser, shedding 2.68%, followed by Nifty Private Bank, which declined by 2.17%. On the positive side, Nifty Oil & Gas gained 1.6%, standing out as the top-performing sector. Other notable gainers included Nifty Realty, Nifty Infra, Nifty Energy, and Nifty Metal, each registering gains of over 1%.

The IT sector was weighed down by Infosys, whose Q3FY25 results, though meeting estimates, raised concerns about revenue pass-throughs and margins. Banking stocks followed suit, dragged by Axis Bank's weaker-than-expected Q3 earnings.

Among the top gainers, Reliance Industries led the charge with a 3% rise, followed by BPCL, which gained 2.5%. Hindalco and Coal India also posted solid performances, climbing 2.2% and 2.1%, respectively. On the losing end, Infosys emerged as the biggest drag on the index, plunging 6%, while Axis Bank fell 4.5%. Overall, 21 constituents of the Nifty ended in the red.

Reliance Industries' robust Q3 performance buoyed its stock, offering some relief to the broader market. In contrast, Infosys and Axis Bank were the biggest drags, with concerns about earnings quality and weak financials, respectively.

The market's advance-decline ratio remained balanced at 1:1, signalling neutral breadth despite the day's volatility. Foreign Portfolio Investors (FPIs) maintained their selling spree, offloading more than Rs 40,000 crore this month, which weighed heavily on market sentiment. Adding to the bearish tone, the Rupee witnessed a marginal dip against the Dollar, while rising crude oil prices further exacerbated concerns.

"Today's fall stems from a combination of global cues, such as Wall Street losses and weak Asian markets, and domestic factors, including FPI selling and high crude prices," explained Trivesh, COO of Tradejini. He added that private banks shaved nearly 450 points off the Sensex.

Infosys led the decline in the IT sector, slumping 6% as concerns over revenue pass-through and margins dampened sentiment. Axis Bank followed closely, tumbling 4.5% on the back of weak Q3 results. On the positive side, BPCL surged 3% after achieving financial closure for its Bina Refinery expansion project. Reliance Industries provided strong support to the indices, rising 3% on the back of an impressive all-round Q3 performance. Defence stocks, including Bharat Dynamics, HAL, and BEL, also witnessed robust buying interest, contributing to gains in the sector.

Other notable mentions included IDBI Bank, which gained 21% this week on divestment updates, and Kalyan Jewellers, which fell another 6%, accumulating a 35% drop this month.

Market This Week

The Sensex and Nifty both declined by over 1% this week. Nifty IT stood out with its steepest weekly drop in nearly a year, plunging 6% amid sectoral weakness. Among the week's top performers were Hindalco, NTPC, HDFC Life, and Reliance Industries, which provided some respite. On the flip side, HCLTech, Infosys, Wipro, and Mahindra & Mahindra emerged as the top weekly losers.

The broader market fared relatively better, with midcap and smallcap indices ending the week flat, but IT stocks dominated the losers' list, accounting for three of the top five decliners.

Experts suggest that the market may continue to face headwinds in the near term due to global uncertainties, persistent FPI outflows, and weak domestic sentiment. However, robust corporate earnings in certain sectors and a resilient midcap performance offer a silver lining.