Nifty Hits Six-Week Low; Nifty IT Index Posts Sharpest Fall in Over Two Months

Indian equity benchmarks ended in red on Monday, September 7, as geopolitical concerns, elevated crude oil prices and renewed expectations of higher US interest rates kept investors cautious.

The decline came after the Nifty 50 had already recorded losses for four consecutive weeks. Information technology stocks were among the biggest drags on the benchmark, with Infosys emerging as the largest negative contributor to the Nifty 50, while TCS also remained under pressure.

Nifty Slips Below 23,800; Sensex Falls Over 380 Points

The Nifty 50 started the session at 23,883.15 and edged up to an intraday high of 23,890. However, the opening gains proved to be short-lived as selling pressure emerged and it exaggerated as the session progressed. As a result, the index registered an intraday low of 23,737.90, before recovering some ground towards the close.

The Nifty eventually settled at 23,779.15, down 137.40 points or 0.57%. The Sensex declined 382.62 points to 76,132.81, taking the benchmark to a six-week low.

Banking stocks also remained weak, with the Nifty Bank ending 312.90 points lower at 57,056.75.

The India VIX rose more than 4% and moved above the 11 mark, reflecting increased caution among market participants.

Why Were IT Stocks Down on Monday? US Rate-Hike Concerns Hit IT Stocks

On Monday, the Indian IT stocks came under sharp selling pressure after stronger-than-expected US jobs growth strengthened expectations that the US Federal Reserve could raise interest rates at its September policy meeting.

Higher interest rates in the US could weigh on corporate technology spending, affecting the demand outlook for Indian IT services companies.

The Nifty IT index fell 2.28%, making its sharpest single-day fall in over two months.

Crude Oil Prices Remain Elevated

Crude oil prices continued to remain a key concern for the Indian equity markets as geopolitical tensions surrounding the Strait of Hormuz kept the risk premium in crude elevated.

Brent crude traded above $97 a barrel, raising concerns over the potential impact of higher energy costs on India, which imports a large part of its crude oil requirements.

Broader Markets Show Mixed Trend

The weakness in benchmark indices did not translate into uniform selling across the broader market.

The Nifty Midcap 100 declined 0.46%, while the Nifty Smallcap 100 gained 0.2% and touched a fresh all-time high during the session.

The divergence indicated continued stock-specific buying interest despite weakness in the large-cap benchmarks.

Despite a mixed trend in the broader markets, the overall market breadth remained weak. Out of 3,698 stocks traded on the NSE, 1,509 advanced, while 2,084 declined. 

US Stock Futures Trade Mixed

US stock futures were mixed on Monday, with the Dow Jones futures down 169 points, or 0.32%, to 53,271, while S&P 500 futures slipped 0.04% to 7,718.75. In contrast, Nasdaq 100 futures gained 0.17% to 29,616.50, indicating relatively better sentiment towards technology stocks.

European Markets Trade Mixed

European markets were mixed on Monday, with Germany’s DAX down 81.94 points, or 0.31%, at 25,966.44. In contrast, FTSE 100 gained 16.90 points, or 0.16%, to 10,847.99, while France’s CAC 40 rose 4.58 points, or 0.06%, to 8,283.35.

RBI Steps Up Dollar Sales to Support Rupee

The Reserve Bank of India reportedly sold at least $8 billion in the foreign exchange market last week to support the rupee, with bankers estimating total intervention between $8 billion and $15 billion. The increased intervention came as policy-driven dollar inflows exceeded $136 billion, giving the RBI greater room to manage the currency. Last week, the rupee strengthened to Rs 94.28 per U.S. dollar, hitting a more than two-month high on September 3, while India’s forex reserves stood at a record $740.8 billion as of August 21. As of today the rupee closed at 94.48 per U.S. Dollar.

New Pre-Open Session Rules Implemented

The NSE’s revised pre-open session framework came into effect today, with limit and market orders allowed from 9:00 AM to 9:05 AM, followed by only limit orders from 9:05 AM to 9:10 AM. Order matching and trade confirmation took place between 9:10 AM and 9:12 AM, followed by a three-minute buffer before regular trading began.