Nifty reaches new high but closes lower amid profit-taking; pharma stocks outperform

The Indian stock market saw a mixed day of trading on Friday. The Nifty 50 index touched a new all-time high before succumbing to profit-taking. The benchmark indices closed marginally lower, snapping a two-day winning streak, as investors turned cautious ahead of key US inflation data.

The BSE Sensex closed at 85,571.85, down 264.27 points or 0.31 per cent, while the Nifty 50 ended at 26,178.95, losing 37.10 points or 0.14 per cent. The Nifty touched a record high of 26,277.35 in early trade before retreating.

Among Sensex stocks, the top gainers were Sun Pharma (1948.90, +2.66 per cent), Reliance Industries (3052.40, +1.72 per cent), Titan (3814.30, +1.50 per cent), HCL Tech (1808.70, +1.31 per cent), and Bajaj Finserv (2004.20, +1.10 per cent). The top losers in the Sensex pack were Power Grid (354.20, -3.03 per cent), ICICI Bank (1306.50, -1.83 per cent), Bharti Airtel (1739.15, -1.74 per cent), HDFC Bank (1752.85, -1.65 per cent), and Kotak Mahindra Bank (1872.95, -1.55 per cent).

Shrikant Chouhan, Head of Equity Research at Kotak Securities, commented on the week’s performance: “Equity markets were in an uptrend this week with all the major indices posting gains. The Nifty-50 and the Sensex-30 index moved more than 1 per cent this week, as Asian markets rallied on the back of broad economic support undertaken by China.”

Sectoral performance was mixed, with pharma and energy stocks outperforming, while banking and real estate faced profit-booking. The BSE IT index emerged as the top gainer among sectoral indices.

Among the Nifty 50 constituents, BPCL led the gainers, surging 6.23 per cent, followed by Cipla (3.25 per cent), Sun Pharma (2.45 per cent), Divi’s Lab (2.36 per cent), and Reliance Industries (1.71 per cent). On the flip side, Power Grid Corporation was the top loser, declining 2.96 per cent, followed by Bharti Airtel (-1.93 per cent), HDFC Bank (-1.71 per cent), ICICI Bank (-1.70 per cent), and Hero MotoCorp (-1.59 per cent).

Ajit Mishra, SVP of Research at Religare Broking Ltd, provided insights on market sentiment: “We maintain a bullish outlook and recommend using periods of consolidation or dips to accumulate quality stocks. In the absence of any major domestic triggers, the focus will remain on global markets for direction. On the Nifty index, we anticipate strong support around the 25,900-26,000 zone, with the upside target still set at 26,500.”

The broader market showed resilience, with the BSE Midcap and Smallcap indices outperforming the benchmark. Market breadth was balanced, with 1,979 stocks advancing and 1,957 declining on the BSE. A total of 287 stocks hit 52-week highs, while 35 touched 52-week lows.

Deepak Jasani, Head of Retail Research at HDFC Securities, noted: “Nifty snapped its six-session winning streak on September 27 after hitting its highest level of 26277.35 points. Cash market volumes on the NSE were up 36.2 per cent compared to the previous day partly due to Nifty rebalancing volumes.”

The Nifty Bank index underperformed, closing at 53,818.55, down 556.80 points or 1.02 per cent. Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd, provided technical insight: “Bank nifty index settled the day on a negative note at 53,834. Technically, the index on a daily scale has formed a bearish Marubozo candle, indicating weakness. However, on the weekly scale, the index is still holding above the breakout point of a rounding bottom pattern.”

Global cues remained supportive, with Asian markets ending mixed after a week of gains driven by China’s stimulus measures and positive US economic data. Brent crude oil prices hovered near $70 per barrel, putting pressure on oil marketing companies.

Prashanth Tapse, Senior vice president (Research) at Mehta Equities Ltd, summarized the day’s action: “After benchmark indices scaled fresh all-time highs in initial trades, investors turned cautious ahead of the key US inflation data and resorted to profit-taking in banking, realty, and power stocks, which saw markets snap 2-day gains.”

Looking ahead, market participants will closely monitor the US core personal consumption expenditures price index data for cues on the Federal Reserve’s monetary policy trajectory. The Indian market’s near-term direction is likely to be influenced by global factors and the upcoming quarterly earnings season.

Ameya Ranadive, Sr Technical Analyst at StoxBox, concluded: “Foreign investment flows into Indian markets are a fraction of their potential as most have been sitting on the sidelines waiting for the markets to correct and valuations to cool down.”

Foreign institutional investors (FIIs) were net buyers on September 26, 2024, with a net inflow of ₹629.96 crore, according to trading data across BSE, NSE, and MSEI. Meanwhile, domestic institutional investors (DIIs) recorded a net buy value of ₹2,405.12 crore. Additionally, proprietary traders posted a significant net inflow of ₹757.78 crore, contributing to overall market activity. However, client categories saw a minor net outflow of ₹24.43 crore, while NRIs recorded a net buy of ₹4.19 crore.

As the Indian equity markets continue to hover near all-time highs, investors are advised to remain cautious and selective in their approach, focusing on quality stocks and sectors showing resilience in the face of global economic uncertainties.