Indian equity benchmarks closed Monday's trading session in negative territory, surrendering early gains as investors booked profits and technology shares faced intense selling pressure. The downturn on January 5 was primarily fueled by concerns over potential additional US tariffs, which overshadowed positive movements in sectors like real estate, automobiles, and metals.
Key Indices and Broader Market Performance
The benchmark Nifty 50 index declined by 0.32%, settling at 26,243 points. Meanwhile, the S&P BSE Sensex dropped 0.41%, closing the day at 85,413. The broader market sentiment was mixed. The Nifty Midcap 100 index witnessed a slight dip of 0.16%, but the Nifty Smallcap 100 index managed to climb 0.56%, suggesting that investor interest remained active in smaller companies.
Sectoral Divergence and Major Drags
Sectoral performance painted a picture of clear divergence. The Nifty IT index was the biggest loser, plunging 1.52% due to heightened worries about US trade policy. This was followed by declines in the Nifty Oil & Gas and Nifty Pharma indices, which fell 1% and 0.28%, respectively.
The sell-off in technology stocks gained momentum after comments from US President Donald Trump indicated that tariffs on India could be increased. This hinges on New Delhi not meeting Washington's demands to reduce purchases of Russian oil. It's noteworthy that imports from India already face a 50% tariff, with half of this imposed as a punitive measure related to Russian crude imports.
On the positive side, several sectors defied the overall bearish trend. The Nifty Realty index surged 2.3%, leading the gainers. Support also came from the Nifty Consumer Durables, Nifty FMCG, and Nifty Metal indices, which rose by 1%, 0.71%, and 0.60%, respectively.
Asian Context and Notable Stock Moves
India stood out as the sole underperformer in the Asian markets on Monday. Key regional indices like Japan's Nikkei 225, South Korea's Kospi, and China's Shanghai Composite posted strong gains of 3%, 3.43%, and 1.38% in that order. This rally was powered by renewed buying in technology shares, extending the previous year's momentum in artificial intelligence-linked companies.
Among individual stocks, the day's trading was marked by significant losses for several prominent names. Ather Energy, IDBI Bank, Vodafone Idea, IRFC, HDFC Bank, and Wipro featured among the top losers, reflecting the cautious and risk-averse sentiment that dominated large-cap and specific sectoral stocks.
The market's behavior indicates a phase of consolidation and sector rotation, where domestic-oriented sectors like realty and consumer goods found favour while export-sensitive sectors like IT bore the brunt of global trade anxieties. Investors are likely to keep a close watch on further developments regarding US trade policy and its implications for Indian corporates.
