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Indian Markets Retreat After Record Highs Amidst Global Woes
1 Dec
Summary
- Benchmark indices gave up early gains, closing lower despite reaching fresh all-time highs.
- The Indian rupee touched a record low against the dollar due to import costs.
- Strong GDP growth dampened expectations of a near-term RBI rate cut, impacting sentiment.
Indian equity benchmarks retreated from record highs on Monday, with both the Nifty and Sensex closing marginally lower after encountering selling pressure at elevated levels. This profit-booking trend was influenced by subdued global sentiment and the Indian rupee hitting an all-time low against the US dollar. The session began with optimism driven by robust second-quarter GDP data, which revealed an 8.2% expansion, the fastest in six quarters. However, this strong growth figure diminished hopes for an immediate interest rate cut by the Reserve Bank of India, contributing to a rise in bond yields.
Sectoral performance on the day was varied. While Nifty Auto, Metal, IT, and PSU Bank indices exhibited strength, Realty, Healthcare, and Pharma sectors faced declines. In the broader market, the Nifty Midcap 100 remained flat, while the Nifty Smallcap 100 saw a modest gain. Top gainers on the Nifty 50 included UltraTech Cement, Tata Motors, and Maruti Suzuki. Conversely, Max Healthcare, IndiGo, and Bajaj Finance were among the notable laggards. Market breadth indicated a slight weakness, with more stocks declining than advancing on the BSE.
The Indian rupee continued its downward trajectory, reaching a fresh record low of 89.75 against the dollar before settling at 89.56. This depreciation was primarily attributed to surging commodity prices, notably gold and silver, which increased India's import bill. Additionally, a softening in GST collections for November, down from the previous month, added to market concerns. Analysts anticipate continued consolidation in the near term, with key support levels identified around 26,100 for the Nifty. Market participants are now keenly awaiting the RBI's policy decision and crucial US economic data releases.
