Indian stocks fall on profit booking after US-India trade deal rally

Indian stock indices, Sensex and Nifty, closed lower on Thursday, dragged down by profit booking after a recent rally. The uptick was fueled by optimism over the India-US trade deal. Global cues and caution ahead of the RBI meeting also weighed.

Markets Snap Rally on Profit Booking

Indian stock indices settled lower on Thursday, with analysts attributing the decline to profit booking following the recent uptick after the announcement of the India-US trade deal. Sensex closed at 83,313.93 points, down 503.76 points, or 0.60 per cent, while Nifty closed at 25,642.80 points, down 133.20 points or 0.52 per cent, respectively.

According to Vinod Nair, Head of Research, Geojit Investments Limited, Indian equities saw consolidation, as weakness was followed by a sharp rally in recent sessions driven by optimism around the US-India trade deal. Nair said possibly profit booking was at play today.

"Global cues added further pressure, with concerns over a broad-based tech sell-off in international markets and heightened US-Iran tensions leading to risk-off sentiment. Metals and small-cap stocks were key underperformers, while broader indices reflected cautious trading," Nair added.

Eyes on RBI Policy Meeting

Market participants are now turning their attention to the upcoming RBI policy meeting slated for Friday. "With India's growth outlook remaining strong, consensus expectations point toward a status quo on rates," Nair said.

Ponmudi R, CEO of Enrich Money, a SEBI - registered online trading and wealth tech firm, said Indian equity markets traded in a tight range, signalling a wait-and-watch phase as investors remained cautious in the absence of fresh domestic triggers. "While overall sentiment remained stable, the benchmarks struggled to sustain momentum at higher levels, reflecting a lack of follow-through buying despite earlier positives," Ponmudi R said.

Recap of December MPC Decisions

RBI Governor Sanjay Malhotra, after the December MPC meeting, characterised India's current macroeconomic moment as a "rare goldilocks period", that marks high economic growth and exceptionally low inflation.

The monetary policy committee of the RBI had cut the repo rate by 25 basis points to 5.25 per cent, after the three-day review meeting that had concluded in December 5. (ANI)

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