(Photo : BT Creative)

• The Indian equity market opened lower, influenced by weak cues from the US markets, with banking stocks seeing a noticeable downward trend.
• Despite losses, some companies saw gains, and midcap and smallcap indices were trading in the green, indicating resilience among smaller companies.
• Market experts predict volatility in the near term due to attractive valuations in other markets and concerns of earnings downgrades.
• Despite challenges, pockets of resilience exist, particularly in the private banking sector and smaller companies, with a positive long-term outlook.

The Indian equity market opened lower on a recent Friday, influenced by weak cues from the US markets. The Sensex was down 142 points or 0.17% at 81,469, and the Nifty was down 36 points or 0.12% at 24,960 at 9.24 a.m. This downward trend was particularly noticeable in banking stocks, with the Nifty Bank index down 204 points or 0.40% at 51,326. Despite the overall downward trend, there were some winners in the Sensex pack. HCL Tech, Wipro, Tata Steel, Tech Mahindra, Sun Pharma, Tata Motors, Titan, Infosys, JSW Steel, TCS, and IndusInd Bank all saw gains.

However, these gains were offset by losses from Bharti Airtel, Bajaj Finance, Asian Paints, Bajaj Finserv, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, NTPC, UltraTech Cement, Maruti Suzuki, HUL, Nestle, and SBI. Interestingly, the midcap and smallcap indices were trading in the green. The Nifty midcap 100 index was up 79 points or 0.13% at 58,995, and the Nifty smallcap index was up 39 points or 0.18% at 18,939. This suggests that while larger companies were struggling, smaller companies were managing to hold their ground.

Sectoral Indices and Asian Markets

Sectoral indices also showed a mixed picture. IT, PSU Bank, pharma, metal, media, and commodities were major gainers, while auto, fin service, FMCG, realty, and energy were major losers. This indicates that the downward trend was not uniform across all sectors, with some managing to buck the trend. Most Asian markets were trading in the green, with Tokyo, Seoul, Hong Kong, Bangkok, and Jakarta seeing gains. However, the US market, which often influences global market trends, closed in the red on Thursday. This suggests that the weak opening of the Indian market was influenced more by the US market's performance than by the performance of other Asian markets.

Market experts predict that the market is likely to remain volatile in the near term, alternating between FII selling and DII buying. This is due to attractive valuations in other markets, particularly Chinese stocks, which could lead to further selling by FIIs in India since Indian valuations are elevated. Concerns of earnings downgrades in H2 FY 25 also make Indian valuations difficult to sustain.

Market Resilience and Future Predictions

However, there is a silver lining. Market experts note a healthy trend of leading private sector banks getting accumulated and showing resilience even in a weak market. This sector is considered the most attractively valued segment in the current market where there is no valuation comfort. On the same day, foreign institutional investors (FIIs) extended their selling, offloading equities worth Rs 4,926 crore. On the other hand, domestic institutional investors also extended their buying, purchasing equities worth Rs 3,878 crore. This suggests that while foreign investors are pulling out, domestic investors are stepping in to buy.

Historically, the Indian stock market has shown resilience in the face of global market volatility. For instance, during the 2008 global financial crisis, the Indian market was one of the first to recover, thanks to strong domestic demand and robust corporate earnings. Similarly, during the Eurozone crisis in 2011, the Indian market managed to hold its ground while other markets faltered.