At the start of trading on Thursday, domestic stock indices showed weakness following a significant rally in the previous session. Investors were grappling with increased volatility and ongoing geopolitical uncertainties.
In early trade, the BSE Sensex fell by 354.93 points, equivalent to 0.46%, to 77,207.97. Similarly, the Nifty 50 dropped by 78.45 points, or 0.33%, to 23,918.90, slipping below the crucial 24,000 level around 9:20 am.
Despite the initial dip, both indexes made a slight recovery later in the day. However, there were sharp intraday fluctuations, indicating a cautious sentiment prevailing in the market.
Adani Ports and Special Economic Zone saw a decline of around 2%, becoming a notable underperformer and exerting pressure on the indices.
This drop followed a strong uptick in the markets in the previous session, driven by the easing of crude oil prices after a temporary truce between the US and Iran.
The market rally was also supported by short-covering and renewed interest in undervalued financial stocks. However, concerns have arisen about the sustainability of this upward trend in light of fresh tensions in the West Asian region, especially related to a potential Israeli strike on Lebanon.
Dr. VK Vijayakumar, Geojit Investments’ Chief Investment Strategist, commented on the market rally in the previous session, attributing it to factors like comfortable valuations and technical elements such as short covering.
He highlighted the Reserve Bank of India’s recent monetary policy decision, noting that while it met expectations, the central bank’s positive remarks on growth provide support for equities.
“The RBI’s view on robust private consumption and sustained investment demand, with GDP growth estimated at 6.9% and inflation at 4.6% for FY27, could lead to nominal GDP growth of around 11.5%, potentially translating into nearly 12% earnings growth,” he explained.
However, Vijayakumar cautioned that the market should closely monitor crude oil prices, as any significant spike due to escalating geopolitical tensions could reverse recent gains and impact market sentiment negatively.
He also mentioned that the swift recovery in stocks previously affected by foreign portfolio investor (FPI) selling demonstrates underlying market strength.
“Stocks that were undervalued due to selling pressure could bounce back at any moment,” he added, emphasizing the importance of patience for investors navigating the current volatile phase.