Stock markets consolidate after rally; IT stocks dip on automation fears

Indian markets opened flat, entering a consolidation phase. IT stocks were under pressure due to fears over new automation tools, while silver prices saw a sharp decline. Broader market indices and sectoral performance were mixed.

Domestic stock markets entered a consolidation phase on Thursday, with the benchmark indices Nifty and Sensex opening almost flat, while IT stocks remained under pressure and silver prices fell sharply.

The cautious market mood followed the recent rally triggered by the India-US deal, even as fresh concerns weighed on specific sectors. The Nifty 50 index opened at 25,755.90, down 20.10 points or 0.08 per cent, while the BSE Sensex opened at 83,757.54, slipping 60.15 points or 0.07 per cent. The flat opening suggested consolidation at the index level after recent gains.

Market Analysis and IT Sector Woes

VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said, "There are a few near-term market trends that are significant. The Nifty appears to be in a consolidation phase without big moves at the index level. However, there are big changes within the Nifty stocks with big declines in IT stocks consequent to the IT sell off in the US spreading to India, too. The sell off has been triggered by Anthropic's new automation tools that the market fears may replace IT services that are presently outsourced. The market fears significant margin pressure for Indian IT companies. What the real impact will be remains to be seen".

Broader Market and Sectoral Performance

In the broader market on the National Stock Exchange (NSE), the Nifty 100 index slipped marginally by 0.12 per cent. The Nifty Midcap 100 lost 0.04 per cent, while the Nifty Smallcap index declined by 0.31 per cent. Sectoral indices on the NSE showed a mixed trend. The Nifty Auto index gained 0.20 per cent, supported by expectations of steady domestic demand. On the other hand, the Nifty IT index declined 0.36 per cent, while the Nifty Metal index dropped sharply by 1.71 per cent. Other key indices such as Media, Pharma, PSU Bank, Healthcare and Consumer Durables were trading in the green with marginal gains.

Key Stock Movements

Among individual stocks, Vedanta fell 3 per cent to Rs 661 per share in early trade, while Hindustan Zinc declined 5 per cent to Rs 605 per share.

Institutional Investor Activity

On the fund flow front, data for Wednesday showed that Foreign Institutional Investors (FIIs) were marginal net buyers in the cash market at Rs 29.8 crore, while Domestic Institutional Investors (DIIs) remained strong buyers with net purchases of Rs 249.5 crore.

Domestic Outlook and Future Expectations

After the growth-oriented Budget and trade deals with the EU and the US, India's growth outlook remains strong, supporting domestic consumption. The continuation of a low-interest-rate regime is expected to support the auto sector and may spill over into segments such as air conditioners as summer approaches. As a result, domestic consumption-driven stocks are expected to remain resilient. So if the halt in FII selling and marginal buying continues, it could add further strength to the markets.

Commodities Market Update

In the commodities market, silver prices saw a sharp fall, tanking 9 per cent to Rs 2,44,654 on Thursday at the MCX at the time of filing this report. Gold prices also declined by 1.25 per cent to Rs 1,51,127 per 24 karat, adding to the cautious sentiment across markets. (ANI)

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