Indian benchmark indices witnessed a mixed close, with the Sensex gaining significantly due to strong performance by Reliance Industries and ICICI Bank, while the Nifty remained largely flat, as a new auction mechanism continues to influence market dynamics.
Key Points
- The Sensex climbed 373.76 points (0.48 per cent) to 78,954.76, while the Nifty edged up marginally by 11.35 points (0.05 per cent) to 24,636.
- A new Closing Auction Session (CAS) mechanism, operational since Monday, is causing divergence between the Sensex and Nifty, reflecting differences in market liquidity.
- Heavyweights like Reliance Industries (3.43 per cent) and ICICI Bank were major gainers, while Power Grid Corporation of India declined after reporting a dip in Q1 net profit.
- Moderation in crude oil prices and the RBI's steady policy stance, with an unchanged repo rate of 5.25 per cent, supported market sentiment.
- Foreign Institutional Investors (FIIs) offloaded equities worth Rs 943.42 crore on Wednesday.
Stock market benchmark indices ended on a mixed note on Thursday, with the Sensex climbing 374 points and the Nifty closing flat, drawing support from moderation in crude oil prices and buying in heavyweights Reliance Industries and ICICI Bank.
After starting the session on a positive note, the 30-share BSE Sensex remained in the positive territory throughout the day. It climbed 373.76 points, or 0.48 per cent, to settle at 78,954.76.
The 50-share NSE Nifty traded in a narrow range for the day and edged marginally higher by 11.35 points, or 0.05 per cent, to end at 24,636.
During the day, the benchmark hit a high of 24,677.05 and a low of 24,604.15.
Impact of New Auction Mechanism
Since Monday, both the benchmark indices have been facing divergence after stock exchanges introduced a new auction mechanism for shares having futures and options (F&O) contracts.
The Closing Auction Session (CAS) in the equity cash segment became operational on Monday, introducing a new auction-based mechanism for determining the closing prices of eligible stocks in a move aimed at making the price discovery process more transparent and robust.
"Indian equity markets ended the session on a mixed note, with the benchmark indices displaying a notable performance divergence even as investor sentiment remained cautiously constructive amid continued optimism over a potential diplomatic resolution to the Middle East conflict," Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a Research Analyst firm, said.
The Nifty traded within a narrow range and finished largely unchanged, while the Sensex posted a modest gain, supported primarily by strength in a heavyweight constituent, he said.
"Four sessions into the NSE's Closing Auction Session (CAS), the divergence between the Sensex and the Nifty is increasingly reflecting differences in market liquidity rather than a transitional anomaly.
"The same 20-minute closing auction continues to produce contrasting outcomes for the two benchmarks because institutional order flow is concentrated more heavily in Nifty constituents than in the Sensex basket.
"As a result, the Nifty's closing level remains more sensitive to auction-driven price discovery, while the Sensex has been relatively less affected," he added.
Top Performers and Laggards
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From the Sensex pack, Reliance Industries climbed 3.43 per cent, the most among the blue-chip firms.
State Bank of India, Bharat Electronics, ICICI Bank, Eternal and Titan were also among the major winners.
Power Grid, Tata Consultancy Services, InterGlobe Aviation and Mahindra & Mahindra were among the laggards.
State-owned Power Grid Corporation of India declined 3.99 per cent after it reported a marginal year-on-year dip in consolidated net profit to Rs 3,598.42 crore in the June quarter.
Global Cues and RBI Stance
>Brent crude, the global oil benchmark, was marginally up by 0.09 per cent at USD 79.52 per barrel.
"Markets drew support from the moderation in crude oil prices, aided by intensified diplomatic efforts to restore regional stability and normalise shipping activity through the Strait of Hormuz.
"The positive sentiment was further reinforced by the RBI's steady policy stance and constructive growth outlook, prompting selective buying in heavyweights, banking and energy stocks," Vinod Nair, Head of Research, Geojit Investments Limited, said.
The Reserve Bank of India on Wednesday maintained a status quo on its benchmark policy rate for the fourth consecutive meeting and retained the stance as "neutral", with Governor Sanjay Malhotra saying the next move of the central bank on interest rates, as well as policy stance, will be data-dependent.
The six-member Monetary Policy Committee unanimously voted to keep the policy repo rate unchanged at 5.25 per cent, and opted to wait for more clarity on whether higher energy costs in the wake of the West Asia crisis feed into broader inflationary pressures.
The central bank marginally raised the GDP forecast for the current fiscal to 6.7 per cent while slightly lowering the inflation projection to 5 per cent.
In Asian markets, South Korea's KOSPI tanked 4.58 per cent, Hong Kong's Hang Seng index declined 1.49 per cent and Japan's Nikkei 225 ended 0.93 per cent lower. Shanghai's SSE Composite index ended marginally higher.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 943.42 crore on Wednesday, according to exchange data.
