Indian Benchmark Indices Close Lower for Second Consecutive Session Amid Volatility

Indian equity markets closed lower for a second consecutive session on Thursday, with benchmark indices surrendering early gains due to broad-based selling in PSU banks, metals, and heavyweight financial stocks. The Sensex ended at 76,933.59, down 0.70 per cent, while the Nifty 50 settled at 24,090.85, losing 116 points or 0.48 per cent to mark its weakest close in six sessions.

Market volatility amplified significantly during the Closing Auction Session (CAS) on the monthly Sensex and Bankex F&O expiry day. The Sensex shed nearly 2,500 points, over 3 per cent, in a matter of minutes during the CAS, which alone accounted for nearly 40 points of the losses. The Bankex 65,000 Put option jumped sharply within minutes, leaving traders perplexed. SEBI chairperson Tuhin Kumar Pandey stated at an NSE event that the regulator is not looking to make changes to its new closing-auction system.

In an unusual market footnote, the Nifty closed exactly at its day low on both Wednesday and Thursday, marking the first time this has occurred on consecutive sessions since the index’s inception in 1997. Ajit Mishra, SVP Research at Religare Broking, noted that markets traded under pressure amid mixed global cues and selling in heavyweight stocks across sectors, advising participants to maintain a cautious, stock-specific approach until greater clarity emerges.

The session experienced a clear divergence between sentiment and reality. Despite positive global cues, including stronger-than-expected revenue from Nvidia and broader advances in Asian markets alongside in-line US PCE inflation data, Dalal Street did not see sustained buying. HDFC Bank acted as a key drag following news of a US class-action lawsuit, while selling in Hindalco, Reliance, Bharti Airtel, and select FMCG names added to the pressure. Conversely, Adani Enterprises, Kotak Mahindra Bank, and Adani Ports finished as top Nifty gainers. Pharma and consumer durables outperformed sectorally, while cement, PSU banks, metals, and media faced heavier selling.

Broader markets demonstrated relative resilience, with both the Nifty Midcap 100 and Nifty Smallcap 100 ending marginally lower by around 0.10 per cent. However, market breadth remained firmly negative, with 313 Nifty 500 stocks ending in the red and an advances-declines ratio of 0.74.

In the currency market, the rupee closed 13 paise weaker at 95.54 against the US dollar, pressured by month-end dollar demand, short-covering, and a modest rebound in the dollar index. Spot support for USDINR is noted at 95.30, with resistance near 95.75. In commodities, gold retreated below $4,600 per ounce and silver held near $68.5 following hotter-than-expected US PCE inflation data at 3.7 per cent, which kept rate-hike possibilities open. Crude oil extended losses before recovering, with Brent around $88.20 and WTI at $82.20, following reports of progress on a maritime corridor agreement in the Strait of Hormuz.

Inderbir Jolly, CEO of PL Wealth, observed that foreign investors have returned as buyers, monsoons have recovered, and domestic earnings backdrop remains resilient, though elevated crude prices, geopolitical developments, and an uncertain global rate environment mean markets are unlikely to move in a broad-based manner.

Attention now shifts to the Federal Reserve Chair's address at the Jackson Hole symposium on Friday for signals on monetary policy, alongside India's July IIP data release to gauge industrial momentum. In the near term, the Nifty is expected to trade within the 23,800–24,600 range, with 24,000 acting as a critical support floor.

"Recent market sessions highlight how structural expiry-day events and sudden liquidity shifts can dramatically amplify volatility, even when underlying corporate and economic indicators show resilience. For investors and entrepreneurs alike, periods marked by sharp sectoral divergences and external headwinds require a disciplined, long-term focus. Managing risk carefully and maintaining liquidity will remain crucial as broader macroeconomic and global interest rate signals continue to evolve." — Dr. Shishir Gupta, Founder & CEO, StartupLanes