Sensex Falls 0.5% on Weekly Expiry; Nifty Smallcap 100 Surges Over 1%

Indian equity markets continued their downward trend on Thursday as benchmark indices extended their losing streak to the fourth consecutive session. Investor sentiment remained cautious amid rising geopolitical tensions after Iran reported attacks on US bases in the UAE and Kuwait, while crude oil prices remained elevated.

The market also tracked the impact of the RBI’s foreign currency mobilisation measures, which attracted $136.38 billion through foreign currency deposits and borrowing schemes, improving banking system liquidity ahead of the festive season.

Sensex Declines Over 400 Points on Weekly Expiry Day 

The Nifty 50 opened the session with a gap-up; however, it failed to sustain higher levels, resulting in a reversal of earlier gains. The index witnessed further weakness during the closing auction session and ended the day at the low of the session.

 The Nifty 50 closed at 23,873.45, declining 41 points or 0.17%. Meanwhile, the decline in the Sensex was sharper, with the index closing at 76,152.86, down 417.49 points amid the weekly expiry. As a result, the key Indian equity benchmark indices extended their decline for the fourth consecutive session. In contrast, the Nifty Bank index bucked the broader trend and gained 0.36%.

Global Markets Remain Cautious Ahead of US Open

US stock futures indicated a mixed opening for Wall Street as investors remained cautious amid recent market volatility.
Dow Jones futures gained 22 points, or 0.04%, to 53,143.00. On the other hand, S&P 500 futures declined 5.50 points, or 0.07%, to 7,671.00, while Nasdaq 100 futures slipped 61 points, or 0.21%, to 29,125.25.

European markets also traded with limited movement. Germany’s DAX declined 48.84 points, or 0.19%, to 25,794.50, while France’s CAC 40 fell 28.38 points, or 0.34%, to 8,252.25. The UK’s FTSE 100 remained almost unchanged, rising marginally by 1.20 points, or 0.01%, to 10,175.00.

Sensex Performance on the Weekly Expiry of September 3 

The BSE Sensex opened at 76,724.95 and initially moved higher to touch an intraday high of 76,924.48. However, the index failed to sustain at higher levels and witnessed selling pressure throughout the session. The Sensex eventually closed at 76,152.86, declining 417.49 points from the previous close. The fall from the day’s high stood at over 770 points. The weakness intensified during the closing auction session (CAS), where the index witnessed a sharp decline and ended at day’s low. The benchmark recorded the biggest intraday loss in the last 5 trading sessions.

Rupee Gives Up Early Gains

The Indian rupee’s upward momentum weakened during Thursday’s session as dollar demand from importers limited gains.

The domestic currency opened stronger at ₹94.28 per dollar, marking a two-month high, but later pared gains and closed at ₹94.47 per dollar as banks with importer requirements increased dollar purchases.

Services Activity Improves but Growth Remains Moderate

India’s services sector showed signs of recovery in August, with the HSBC India Services PMI improving to 54.1 from 53.3 in July.

Despite the improvement, growth remained close to a four-year low as new business growth stayed subdued due to weaker bookings and competitive pressures. Hiring activity improved during the month, although input costs increased and service providers raised selling prices at the fastest pace since March.

Bank Nifty Outperforms as Liquidity Improves

Banking stocks remained in focus as the RBI’s special foreign currency mobilisation measures boosted liquidity conditions.
The measures attracted $136.38 billion in foreign currency inflows, pushing banking system liquidity to ₹6.65 lakh crore, the highest level since May 2022. Improved liquidity conditions supported sentiment across banking stocks, helping the Nifty Bank index outperform the broader market.

Crude Oil Near $97 Amid Rising Geopolitical Risks

Brent crude prices remained elevated near $97 per barrel as supply concerns increased following reports of Iran’s attacks on US bases in the UAE and Kuwait.

Brent futures traded around $96.93 per barrel after recovering from the day’s lows, keeping concerns over inflation and global interest rates alive.

Nifty Smallcap 100 Index Surged Over 1.20%

The broader market witnessed buying interest despite weakness in frontline indices.

The Nifty Midcap 100 index gained 0.37%, while the Nifty Smallcap 100 index advanced 1.20%, ending a three-day losing streak.

Nifty Realty Leads Sectoral Gains; Nifty IT Remains Under Pressure

Majority of the sectoral indices ended in green, with seven out of 11 Nifty sectoral indices closing higher.

The Nifty Realty index emerged as the top performer, gaining 2.58% and posting its strongest gain in nearly eight weeks. All stocks within the index ended the session with gains of more than 1%.

Meanwhile, the Nifty IT index emerged as the worst performing sector on Thursday as it declined 0.85%. 

Market Breadth Remained Strong

Despite the decline in benchmark indices, market breadth remained tilted towards advancing stocks due to outperformance by the broader market indices.

Out of 3,628 stocks traded on the NSE, 2,208 stocks advanced, 1,313 declined, and 107 remained unchanged.