Stock market today: Nifty 50, Sensex snap 2-day rally as profit booking wipes out early gains; small-caps bleed

Indian Stock Market: Indian benchmark indices slipped into negative territory in today’s session, January 24, as profit booking during the second half of the trade erased earlier gains, causing the indices to end their two-day recovery rally.

The broader market also tumbled into the red after witnessing some buying interest in the previous trading session. It was the small-cap stocks that took a heavy beating in trade. Weaker-than-expected numbers in Q3FY25, continued selling by the FPIs, valuation concerns across the board, and worries over Donald Trump’s economic policies are all weighing on the markets currently.

As seen in the past, companies that reported earnings below street estimates are facing severe sell-offs on Dalal Street, causing their shares to trade at multi-month lows. Further, the weak management commentary post results further weighing on sentiments. 

Stocks such as Dr. Reddy's Laboratories, Cyient, Hindustan Petroleum Corporation, United Spirits, Tata Teleservices (Maharashtra), Zee Entertainment Enterprises, Adani Energy Solutions, Syngene International, Tejas Networks, and Nippon Life India Asset Management have tumbled between 2% and 23% in today’s trade following the announcement of their Q3FY25 numbers on Thursday.

Nifty 50, Sensex end lower after a sharp pullback

In today's session, the Nifty 50 tumbled 255 points from the day's high to end the session 0.49% lower at 23,092, concluding the week with a drop of 0.48%, marking the third consecutive week of declines for the index. Likewise, the Sensex wrapped up the session with a drop of 0.43%, plummeting 795 points to end at 76,190. The index also concluded the week with a fall of 0.56%, ending at 76,175.

The Nifty Midcap 100 index concluded the session with a decline of 1.55%, while the Nifty Smallcap 100 index witnessed even more selling pressure, tumbling by 2.35%. Both indices finished the week with a drop of up to 4%.

Commenting on today's market performance Vinod Nair, Head of Research, Geojit Financial Services, said, "The market is haywire, with sentiment so weak that even results in line with expectations are triggering selloffs. While the broader market is under pressure, positively, large-cap stocks are showing some resilience. From the taper tantrum to geopolitical risks, the Indian market has borne numerous challenges in its history."

"Similarly, the ongoing appreciation of the USD could reverse once market yields flatten out, as the Trump administration is to sustain its slowing. This negative market bias is not expected to persist for long. For long-term investors, this is not the time to sell but rather to be patient and adopt an accumulation strategy," he added.

FPIs outflows top ₹65,000 crore

Overseas investors continue to withdraw funds from Indian markets, with total outflows in January so far reaching ₹66,321 crore, according to exchange data. Except for January 2, FPIs have remained net sellers in all trading sessions. 

The selling by FPIs is not limited to India; they are also withdrawing funds from other Asian markets, with experts suggesting that rising US bond yields are prompting overseas investors to shift their funds back to the US.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said, "FPI flows to date in January 2025 have been negative for all key emerging markets (except Brazil). India, Indonesia, Malaysia, the Philippines, South Korea, Taiwan, Thailand, and Vietnam saw outflows of US$6,111 million, US$189 million, US$519 million, US$96 million, US$456 million, US$1,261 million, US$283 million, and US$281 million, respectively. Brazil saw inflows of US$515 million."

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.