Indian Stock Markets Slip as Sensex and Nifty 50 Snap Three-Day Winning Streak on June 10

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Indian Stock Markets End Winning Streak Amid Global Weakness and Profit Booking

Team FS

10/Jun/2024

Key Points:

Sensex and Nifty 50 Snap Winning Streak: The Sensex and Nifty 50 indices ended their three-day winning run due to profit booking and weak global market cues.
Impact of Global Events: European and Asian markets witnessed selloffs following political uncertainty in France, affecting Indian market sentiment.
Mid- and Small-Cap Performance: Despite the decline in major indices, mid- and small-cap indices saw gains, increasing overall market capitalization.

Indian stock market benchmarks, the Sensex and the Nifty 50, ended their three-day winning streak on Monday, June 10, due to profit booking at higher levels amid weak global cues. With the Lok Sabha elections and government formations complete, investors are now shifting their focus to global cues and market fundamentals. Concerns over high valuations, delayed rate cuts, and a lack of fresh positive triggers continue to limit the market's upside potential.

Market Reaction to RBI Decision

After the Reserve Bank of India (RBI) maintained a status quo on the repo rate and policy stance on Friday, market participants are now closely watching the US Federal Reserve's decision expected on Wednesday this week. However, after the surprisingly strong US monthly jobs data for May, expectations for a rate cut by the US Fed have diminished.

Intraday Performance and Closing Numbers

Both the Sensex and the Nifty 50 opened higher on Monday, hitting fresh record highs during intraday trade, but eventually closed lower due to profit booking and weak global cues. The Sensex opened at 76,935.41, against its previous close of 76,693.36, and hit a fresh record high of 77,079.04 during the session. The index finally closed with a loss of 203 points, or 0.27 per cent, at 76,490.08. Similarly, the Nifty 50 opened at 23,319.15, against its previous close of 23,290.15, and hit a fresh all-time high of 23,411.90 before closing 31 points, or 0.13 per cent, lower at 23,259.20.

Global Factors Weigh on Sentiment

Major European markets experienced a selloff, which also negatively impacted sentiment in Asian markets. This followed French President Emmanuel Macron's unexpected announcement to dissolve the parliament and call for fresh elections later this month.

Mid- and Small-Cap Stocks Show Resilience

In contrast to the performance of the Sensex and Nifty 50, the mid- and small-cap indices continued to witness buying interest. The BSE Midcap index rose by 0.56 per cent, while the Smallcap index jumped by 1.04 per cent. Due to gains in these segments, the overall market capitalization of BSE-listed firms rose to nearly ₹425 lakh crore from nearly ₹423.5 lakh crore in the previous session, making investors richer by about ₹1.5 lakh crore in a single session.

Broader Market Performance

The Indian stock markets have shown resilience in recent weeks, largely driven by positive domestic cues following the Lok Sabha elections. However, global uncertainties and profit booking at elevated levels have now led to a temporary halt in the upward momentum. On June 10, 2024, both the Sensex and Nifty 50 indices experienced a decline after reaching fresh record highs during the trading session.

The market's decline was primarily influenced by global events, particularly the political turmoil in France. French President Emmanuel Macron's decision to dissolve the parliament and call for new elections created uncertainty in the European markets. This political development led to a selloff in major European markets, which subsequently impacted sentiment across Asian markets, including India.

Investor Sentiment and Market Capitalization

Despite the overall market decline, mid- and small-cap stocks continued to attract investor interest. The BSE Midcap index rose by 0.56 per cent, reflecting confidence in the growth prospects of mid-sized companies. The Smallcap index performed even better, jumping by 1.04 per cent. This divergence in performance between the large-cap and mid- to small-cap segments suggests that investors are seeking opportunities in relatively undervalued stocks outside the major indices.

The overall market capitalization of BSE-listed firms increased significantly due to the gains in mid- and small-cap stocks. The market cap rose to nearly ₹425 lakh crore, an increase of about ₹1.5 lakh crore from the previous session. This increase in market cap indicates that despite the profit booking in major indices, there is still substantial investor interest and confidence in the broader market.

Looking Ahead: Key Influences

Looking ahead, market participants are eagerly awaiting the US Federal Reserve's decision on interest rates, which is scheduled for Wednesday. The recent strong US jobs data for May has dampened expectations for a rate cut, which could influence global market dynamics. Additionally, concerns over high valuations and a lack of fresh positive triggers are likely to keep the Indian markets range-bound in the near term.

In conclusion, while the Indian stock markets have experienced a temporary setback due to profit booking and global uncertainties, the underlying sentiment remains positive, particularly in the mid- and small-cap segments. Investors will continue to monitor global developments and policy decisions closely as they navigate the current market environment.

Also Read : Today's Top Buzzing Stocks: Major Gainers and Losers Revealed!

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