Bears dominated the stock market again on August 8, as India’s key indices, Nifty and Sensex, closed lower. A significant drop in IT and Metal stocks contributed to the negative sentiment.
At the close, the Sensex fell by 581.79 points or 0.73%, ending at 78,886.22. Meanwhile, the Nifty dropped by 180.50 points or 0.74%, finishing at 24,117.00. In total, 1,716 shares advanced, 1,674 shares declined, and 75 shares remained unchanged.
RBI’s Monetary Policy Decision
The decline followed the Reserve Bank of India’s (RBI) Monetary Policy Committee’s (MPC) decision to keep the benchmark repo rate steady at 6.5% on August 8, aligning with market expectations. The MPC also retained its focus on the ‘withdrawal of accommodation.’
RBI Governor Shaktikanta Das emphasized caution due to falling core inflation, marking the ninth consecutive meeting with unchanged rates.
Market Sentiment and Mid-Small Cap Indices
The negative market sentiment was strong enough to impact mid- and small-cap indices, which reversed their morning gains and ended in the red. The midcap index fell by 0.4%, while the smallcap index decreased by 0.2%.
The India VIX, an index measuring market volatility, rose by over 2%, closing at 16.6.
Expert Insights
Vinod Nair, Head of Research at Geojit Financial Services, noted that the domestic market reversed earlier gains due to the RBI’s cautious policy stance and revised CPI and growth forecasts for Q1. He also highlighted concerns over the US job data and the potential for a recession in the US, which might prompt the Federal Reserve to cut rates sooner than expected.
Sector Performance
The major laggards included the Nifty IT, Metal, Energy, and Infra indices, all dropping nearly 2%. IT stocks were the hardest hit, with significant declines in companies like Infosys, LTIMindtree, and HCLTech. Although the Pharma and Healthcare index rose by almost 1% in the morning, it ended the day with most gains erased.
Top Losers and Gainers
Major losers on the Nifty included LTIMindtree, Grasim Industries, Asian Paints, Power Grid Corp, and Infosys. On the flip side, HDFC Life, Tata Motors, SBI Life Insurance, HDFC Bank, and Cipla were among the gainers.
Market Outlook
Ajit Mishra, Senior Vice President of Religare Broking, advised traders to remain cautious amidst ongoing global uncertainty. He noted that the Nifty faces resistance around the 24,350 mark, and a decisive drop below 23,900 could trigger further declines. Mishra recommended a hedged strategy to navigate the current volatility.
