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Informist, Monday, Jan. 27, 2025

By Akash Mandal

MUMBAI – Benchmark equity indices ended sharply lower Monday, extending their southward journey for the second consecutive session. The losses were led by information technology stocks that fell after Chinese startup DeepSeek's low-cost and low-power artificial intelligence model raised concerns over higher competition globally. These stocks, which have the second-most weightage of over 14% in the Nifty 50, contributed to a more than 0.4% fall in the index.

The market's overall fall was also due to weak earnings growth for the third consecutive quarter, recurring selling by foreign investors, and some caution ahead of the Union Budget, due Saturday. The Nifty 50 closed at 22829.15 points, down 263.05 points, or 1.1%, and the BSE Sensex closed at 75366.17 points, down 824.29 points, or 1.1%. The 50-stock index closed below the key 23000 level for the first time in more than seven months and the Sensex ended below the 76000-mark for the second time so far in January.

The Nifty 50 had briefly breached its crucial support of 22800 points, but then recovered slightly. Only six stocks in the Nifty 50 closed in the green. Shares of index-heavyweight ICICI Bank closed 1.6% higher, limiting the fall of benchmark indices. 

The domestic market was volatile, with the India VIX jumping more than 8% to 18.1, hinting at the near-term nervousness in the market. The fear gauge had briefly risen more than 10% in late afternoon trade. 

Broader market indices were also badly hit, with small-cap stocks being the worst affected and falling nearly 4%, while their mid-cap counterparts declined nearly 3%. The Nifty Smallcap 250 fell 3.7% and reached its lowest level in more than a year and a half. Small-cap stocks such as Anant Raj and Aditya Birla Sun Life AMC plunged nearly 18% and 9%, respectively. Netweb Technologies India, Newgen Software Technologies, and Tejas Networks also declined 10-12%.

All sectoral indices were in the red, with Nifty FMCG and Nifty PSU Bank rising briefly intraday before falling in line with the overall market. On the other hand, IT companies such as HCL Technologies, Tech Mahindra, and Wipro were down 3.8-4.5% and were the worst hit in the Nifty 50. 

Pharmaceutical and healthcare stocks were also down amid weak earnings and media reports of US President Donald Trump potentially stopping funding for the president's Emergency Plan for AIDS (acquired immunodeficiency syndrome) Relief causing a wide sell-off in the sector. If Trump stops the funding for the emergency plan, it will impact domestic companies such as Laurus Labs Ltd. and Ipca Laboratories Ltd, which have extensive operations in Africa, Mehul Sheth, lead pharma analyst at HDFC Securities, said. Sheth also said earnings have been weak across the sector, and the slowdown in growth is led by a lack of volume growth. Shares of Laurus Labs, Gland Pharma Ltd, and Granules India Ltd ended lower by almost 12%, 8%, and 7%, respectively.  

On the earnings front, ICICI Bank Ltd gained 1.6% after the bank's INR-117.92-billion net profit for the December quarter comfortably beat analysts' estimates of INR 114.61 billion. This profit was made on a total income of INR 483.68 billion. Shares of Bank of India rose 6% after its net profit for the quarter rose almost 3% on year to INR 25.17 billion. 

On the other hand, Godrej Consumer Products recovered most of its early losses and ended down 0.3%, extending the fall for the sixth consecutive session. The company reported a 14% on-year fall in its consolidated net profit to INR 4.98 billion for the December quarter, missing analysts' estimate of INR 5.30 billion. 

Shares of Balkrishna Industries Ltd fell over 3% despite the company's net profit of INR 4.39 billion beating analysts' estimates of INR 3.85 billion. IDFC FIRST Bank Ltd declined almost 9% after its net profit more than halved on year to INR 3.4 billion, also missing the Street's view of INR 4.90 billion. In its post-earnings conference call, the bank said the pain from its microfinance book is going to worsen in Jan-Mar before the issue becomes better. 

Among other specific stocks, BSE, Supreme Industries, and Vodafone Idea declined more than 6% each and were among the worst hit in the Nifty 200. 

* Of the Nifty 50 stocks, 6 rose and 44 fell

* Of the Sensex stocks, 6 rose and 24 fell

* On the NSE, 352 stocks rose, 2,535 fell, and 68 were unchanged

* On the BSE, 593 stocks rose, 3,522 fell, and 119 were unchanged

* Nifty Media: down 4.7%; Nifty IT: down 3.4%; Nifty Private Bank: down 0.5%

BSE                                                 NSE

75366.17 points, down 824.29 points, or 1.1%        22829.15 points, down 263.05 points, or 1.1%

End

Edited by Deepshikha Bhardwaj

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