Closing Bell: Market Snaps 3-Day Gaining Streak, Sensex & Nifty End Lower, Infosys & TCS Drag

The Indian stock market benchmarks, the Sensex and the Nifty 50 ended their three-day winning streak on Monday, June 10. The markets faced a downturn due to profit booking at higher levels and negative global cues. Despite hitting an intra-day record high, the indices closed in the red, reflecting the cautious sentiment among investors.

On Monday, the Sensex hit an intra-day record high of 77,079 points, while the Nifty 50 reached an all-time high of 23,412 points. However, the market could not sustain these levels, closing at 76,490 points for the Sensex, down by 203 points, and 23,259 points for the Nifty 50, down by 31 points. The Nifty Bank index also slipped by 22 points, closing at 49,781, while the Midcap Index saw a mild rise of 41 points, finishing at 53,236.

The overall market breadth favoured advances, with about 2,378 shares advancing, 1,183 shares declining, and 87 shares remaining unchanged. This indicates a relatively positive sentiment in the broader market compared to the benchmarks.

The IT sector was the biggest drag on the market, with the Nifty IT index falling nearly 2%. This decline was driven by strong US monthly jobs data, which dimmed hopes of the US Federal Reserve cutting interest rates in the near term. Major IT stocks such as Infosys, Tech Mahindra, and TCS led the decline, making them among the worst performers on the Nifty 50. Notably, four of the top five losers on the Nifty were IT stocks, including Tech Mahindra, Infosys, Wipro, and LTI Mindtree.

Financial service stocks also saw a downturn, contributing to the overall decline in the Nifty 50. In contrast, construction and power stocks managed to post gains, providing some support to the index. Life insurance companies reported healthy business updates for May, leading to a 1-3% rise in their stock prices.

The broader market, including Smallcap and Midcap stocks, outperformed the benchmarks. The BSE Smallcap and Midcap Indices closed 1% and 0.6% higher, respectively. This indicates investor interest in smaller companies, possibly due to their growth potential and attractive valuations.

Among the notable performers, Samvardhana Motherson continued its winning streak, rising another 5% on Monday. Fertilizer stocks also saw buying interest as Prime Minister Narendra Modi released the latest instalment of the Kisan Samman Nidhi, a financial support scheme for farmers. Cement stocks continued their upward trajectory on expectations of a government push in the housing sector.

On the downside, Mphasis fell by 3% due to block deals involving up to 15% of its equity. GAIL also ended 5% off its highs despite announcing a significant investment of Rs 60,000 crore for an ethane cracker project.

The Indian market's performance was also influenced by global factors. Major European markets experienced a selloff, which negatively impacted Asian market sentiment. This was triggered by French President Emmanuel Macron's unexpected decision to dissolve the parliament and call for fresh elections later in the month. The political uncertainty in Europe added to the market's cautious mood.

"Gains by the far-right in voting for the European Parliament on Sunday prompted a bruised French President Emmanuel Macron to call a snap national election and added uncertainty to Europe's future political direction," reported Reuters. This development, coupled with strong US job data, contributed to the bearish sentiment in global markets.

Investors are now awaiting the outcome of the Federal Reserve's two-day policy meeting and the upcoming US inflation data, both scheduled for June 12. These events are expected to provide further insights into the future direction of interest rates, which could significantly influence market sentiment.

The Indian stock markets faced a setback on Monday due to profit booking and adverse global cues. While IT and financial service stocks dragged the indices down, construction, power, and broader market segments showed resilience. As global events continue to unfold, investors will keep a close eye on key economic data and policy decisions that could shape the market's direction in the coming days.