Sensex falls 417 points, Nifty closes below 23,900 as market erases all morning gains. What lies ahead?

The Indian stock market extended losses on Thursday, with Sensex and Nifty wiping off all morning gains to close in the red as elevated oil prices, bond yields and other factors continued to weigh on investor sentiment.

Sensex saw a sharper decline following the closing auction session (CAS) on its weekly expiry day, tumbling 417 points or nearly 0.6% to close at 76,153. Nifty 50 meanwhile fell 41 points or 0.17% to end the session at 23,873 on Thursday.

Titan, Trent, ITC, Mahindra & Mahindra (M&M), Bajaj Finserv and HCL Technologies shares dropped around 2% each to lead losses on Sensex, while those of Tech Mahindra, Sun Pharma, TCS, UltraTech Cement, Bajaj Finance, Kotak Mahindra Bank, Maruti Suzuki, IndiGo and Hindustan Unilever (HUL) shares dropped more than 1% each. Bucking the trend, Axis Bank and Adani Ports shares gained nearly 1% each.

Broader markets however sharply outperformed benchmarks, with Nifty Smallcap 100 jumping more than 1% while Nifty Midcap 100 index gained 0.4%. The overall market breadth thereby turned positive, with NSE seeing 2,208 advances against 1,313 declines, while 107 stocks remained unchanged.

"The market's recovery attempt lost steam as supportive global cues and renewed FII inflows collided with lingering geopolitical tensions & elevated global yields. Banking and realty stocks provided leadership, while smallcaps attracted investor interest, reflecting confidence in domestic growth prospects. Stubbornly high crude oil prices continue to act as key overhangs for the domestic market,” said Vinod Nair, Head of Research at Geojit Investments.

What lies ahead for Dalal Street?

While India's strong growth momentum and recent sovereign rating upgrade remain powerful structural positives, near-term market direction will largely depend on the evolution of global macro and geopolitical risks, Nair added.

The Nifty started on a gap-up note but faced resistance near the lower band of the rising channel, triggering selling pressure throughout the day, said Rupak De, Senior Technical Analyst at LKP Securities. He noted that on the daily timeframe, a Dark Cloud Cover candlestick pattern has formed, indicating potential weakness in the near term.

On the lower end, support is placed at 23,850, below which the index may decline towards 23,700–23,730, the analyst said. Meanwhile on the higher end, he sees the index finding resistance at 24,000. “A sustained move above 24,000 would be required to negate the immediate bearish bias, according to De.