Second Half Recovery Limits Nifty Losses to 78 Points; IT Index Tanks 5.5%

Mr. Nandish Shah - Deputy Vice President, HDFC Securities

Dalal Street witnessed another volatile trading session, with bears dominating the first half and bulls staging a strong comeback in the latter half. The Nifty opened 68 points lower and extended its decline to an intraday low of 23,151, marking a drop of 332 points to its weakest point. However, buying interest emerged in the second half, leading to a sharp recovery of over 300 points from the day's low. The index eventually closed at 23,405, down 78 points. NSE cash market turnover fell 6% compared to the previous session.

Among Nifty constituents, Apollo Hospitals, Tata motor passenger vehicles, and Indigo led the gains, while IT stocks - TCS, Tech Mahindra and HCL Tech were the top laggards.

Sectoral trends remained mixed. PSU Banks, Private Banks, Healthcare and Pharma indices outperformed, whereas IT, FMCG and Realty sectors faced sharp selling pressure. The Nifty IT index plunged over 5% amid rising concerns around AI disruption and its potential impact on the traditional outsourcing business model.

Broader markets mirrored the benchmark's recovery in the second half. The Nifty Midcap 100 and Smallcap 100 indices rebounded over 1.5% from their intraday lows, eventually closing with marginal losses of 0.42% and 0.11%, respectively. Market breadth weakened, with the BSE advance-decline ratio slipping to 0.76.

The Indian rupee extended its losing streak for the second consecutive session, depreciating by 44 paise to close at 95.70 against the US dollar. The currency remained under pressure due to persistent capital outflows, concerns over US President Donald Trump's tariff proposals, and rising crude oil prices amid escalating geopolitical tensions in the Middle East.

On the technical front, the sharp intraday recovery has resulted in the formation of a Doji candlestick on the daily chart, indicating indecision after a correction of over 900 points from the recent swing high of 24,089.

Going ahead, the day's low of 23,151 is likely to act as a crucial support level. Traders may consider initiating long positions with a stop-loss at this level, while 23,800 is expected to act as a key resistance zone for the index.

Source : Equity Bulls

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HDFCSecurities MarketUpdate Nifty ITIndex