Sensex, Nifty 50 end lower but recover as banks support late rebound after IT-led selloff

Stock market today: Indian markets witnessed sharp fluctuation in today's trading session, March 12, as weak global cues and escalating trade tensions, coupled with downgrades on IT stocks, led frontline indices to swing back and forth in trade. However, they managed to end the session with mild losses.

The strong gains in banking stocks lent support to the market recovery during the second half of the trading session, causing Nifty 50 to recover 141 points, or 0.63%, from the day's low to end the session at 22,470 points, 0.12% lower than the previous close, while the Sensex ended the session with a mild cut of 0.10% at 74,030 points, recovering 431 points, or 0.58%, from the day's low.

The broader market also bounced back from the day's low but underperformed the benchmark indices, with the Nifty Midcap 100 index concluding the session with a cut of 0.57% at 48,486 points, while the Nifty Smallcap 100 index ended the session at 15,044 points, 0.21% lower compared to Tuesday's closing price.

Global trade tensions escalated further after Donald Trump announced a 25% tariff on steel and aluminum imports on Tuesday, set to take effect from March 12. He threatened to double duties on Canadian steel and aluminum to 50% after Ontario announced plans to place a surcharge on electricity sent to the US, only to revert to the previously announced 25% rate after the provincial government backed down.

A series of tariff announcements from the White House is driving investors away from risky assets, causing stocks to bleed relentlessly, with the majority entering correction territory.

Despite sharp weakness in U.S. markets, Indian markets have managed to hold steady, as domestic equities have already undergone a major correction in recent months. Experts believe that the decline in the mother market will have minimal impact on Indian equities, as most stocks have already priced in global uncertainties and are finding support at lower levels.

Sectoral Performance: IT stocks extend losses; banks make a strong recovery

Indian IT stocks extended their losing streak for the fourth consecutive trading session today, sending the Nifty IT index tumbling another 2.91%. Infosys emerged as the top laggard in trade after receiving multiple downgrades from brokerage firms, causing it to tumble 4.26% to an 8-month low of ₹1,590 apiece.

Domestic brokerage firm Motilal Oswal downgraded Infosys to 'Neutral,' citing growth concerns. Similarly, global brokerage firm Morgan Stanley trimmed its rating on the stock to ‘Equal Weight’ from ‘Overweight’ and lowered its target price to ₹1,740 per share from the previous ₹2,150.

Other sectoral indices, including Nifty Realty, Nifty Media, Nifty Metal, and Nifty PSU Bank, all ended lower with losses ranging between 1% and 1.65%.

On the winning side, private banks managed to rebound in an otherwise weak market, contributing to the majority of the market recovery in trade. The Nifty Bank index gained 0.73%, ending a three-day losing streak. Likewise, Nifty Auto, Nifty Pharma, and Nifty Oil & Gas all finished the session with gains.

Commenting on today's market performance, Vinod Nair, Head of Research, Geojit Financial Services, said, “Persistent uncertainties surrounding global trade and the fear of a U.S. recession continue to influence the domestic market's momentum. Despite the stabilisation in valuation to the 5-year average and signs of improvement in urban and rural demand, investor risk appetite remains subdued.”

"Today's key concern is whether the ongoing correction happening in the US market can spill over to the global market. The US market is under pressure from weakening economic data and uncertainty over tariff policy," he added.

Technical Outlook

Rupak De, Senior Technical Analyst at LKP Securities, said, “The Nifty experienced another volatile session as traders remained skeptical about the recent market recovery and chose to stay neutral ahead of the Nifty weekly expiry. Throughout the day, the index remained above 22,300. A multiple-bottom formation is observed around 22,300, making this level a crucial short-term support. On the higher end, it faces resistance at 22,500/22,600.”

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.