Indian frontline indices remained range-bound in volatile trading on Wednesday, as investors chose to stay cautious ahead of the crucial US Federal Reserve meeting, where the announcement of the first rate cut in four years is anticipated. The market experienced a tug-of-war between declining IT stocks and resilient financial shares. A sharp drop in IT stocks heavily impacted the market, pulling the frontline indices down. Additionally, pharmaceutical stocks also faced significant declines.
Amid this volatile trade, the Nifty 50 ended the session with a 0.14 per cent gain at 25,418 points, and during the trade, the index recorded a fresh all time high of ₹25,482 points, nearing the 25,500 level. Likewise, S&P BSE Sensex has also concluded the trade at 82,968 points, a 0.13% lower as compared to the previous close. Among the 50 Nifty constituents, 29 stocks ended in the negative territory, with TCS leading at 3.4 per cent drop.
Other notable losers included Infosys, HCL Technologies, Tech Mahindra, Wipro, Bajaj Auto, Sun Pharmaceutical, and Tata Consumer Products, all of which dropped between 3.1 per cent and 1.5 per cent.
On the other hand, small and midcap stocks underperformed the benchmark indices in Wednesday’s trade, with the Nifty Midcap 100 dropping to 59,738 points, a 0.74% fall, while the Nifty Smallcap 100 index has also tumbled by 0.43% to 19382 points.
Nifty IT index posts worst intraday performance in 6 weeks
The sharp drop in the large-cap IT stocks has led the Nifty IT index to plunge by 3.02% to 41,814 points, falling below the 42,000 mark for the first time since September 9. Today’s drop in the index was the biggest intraday drop in 6 weeks, and also this decline has pushed the index to a 2-week low.
The significant decline in IT stocks observed today is mainly due to profit-taking by investors after a strong rally over recent months. Since June, IT stocks have experienced a bullish trend, with the Nifty IT index rising by 32% from June to August, leading investors to lock in profits.
This profit booking occurred ahead of the anticipated US Federal Reserve rate-reduction cycle, expected to start on September 18. With easing inflation and a cooling labor market in the US, investors are preparing for this policy shift. Market expectations had priced in a 25-basis point cut, with some anticipating a more substantial 50-basis point reduction, which analysts believe could spur a rally in stocks.
Additionally, investor sentiment was further affected by news that Accenture will delay promotions by six months due to a challenging consultancy environment. In June, Accenture revised its fiscal 2024 revenue growth forecast to 1.5%–2.5%, down from the previously adjusted range of 1%–3%, which had already been lowered from its earlier guidance of 2%–5%.
