Indian equity benchmarks Sensex and Nifty fell on Wednesday as IT stocks slid and rising oil prices weighed on sentiment. The Sensex fell 352.6 points to close at 73,246. Lokesh Manik said, "This is a positioning-led fall, not an earnings one." Buying in auto stocks helped recover some intraday losses.

Synopsis

Indian equity markets took a hit on Wednesday, primarily due to declines in the IT sector and escalating crude oil prices. Both the Sensex and Nifty closed lower, showcasing investors' cautious mood amidst significant intraday drops. Key downturns were influenced by Reliance Industries along with various IT stocks, but the auto sector and select banking stocks sparked some buying activities that alleviated part of the losses.

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Mumbai: Indian equity benchmarks ended lower on Wednesday as selling in information technology stocks, rising crude oil prices and caution ahead of the US Federal Reserve's policy decision weighed on sentiment. However, buying in auto and select banking stocks helped the indices recover much of their intraday losses.

The Sensex fell 352.6 points, or 0.48%, to close at 73,246 after plunging as much as 995 points, or 1.35%, to 72,603.5 during the session. The Nifty declined 50.90 points, or 0.22%, to settle at 22,699. Both indices had fallen as much as 1% earlier in the day.

Investor sentiment remained cautious as Brent crude prices climbed following an attack on a Saudi Arabian refinery. The global oil benchmark rose 1% to $114.50 a barrel, adding to concerns over inflation and its potential impact on India's economy and corporate earnings. Markets also awaited the outcome of the US Federal Reserve's policy decision.

"FPIs have sold about ₹53,000 crore this month, while domestic institutions keep absorbing it. This is a positioning-led fall, not an earnings one, said Lokesh Manik, senior analyst at Vallum Capital. Reliance Industries was among the biggest drags on the benchmarks, with its shares falling 3.19% amid Jio Platforms' market debut. IT stocks also came under pressure, with Infosys declining 3.4%, Tech Mahindra 1.92% and TCS 1.48%.

IT stocks plunged amid global optimism around AI-linked stocks. South Korean chipmakers led a broader recovery in AI-related stocks after SK Hynix reported a sevenfold jump in profit and announced an additional $45 billion in shareholder returns. Among Asian markets, South Korea's Kospi was up 6.6%, Japan's Nikkei 225 was up 1.08%, Shanghai's SSE Composite and Hong Kong's Hang Seng indices also traded in positive territory.

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Back home, the broader market outperformed the benchmarks, with the Nifty Midcap 150 index rising around 0.3% and the Nifty Smallcap 250 index gaining about 0.3%. Among sectors, the Nifty Auto index advanced 1.4%, while consumer durables, media and pharma stocks gained around 1% each.

In contrast, the Nifty IT and Oil & Gas indices fell around 2% each, while Realty and FMCG stocks declined about 0.5%.

In currency markets, the rupee weakened 11 paise to close at 95.23 against the US dollar, compared with Tuesday's close of 95.12. "Recent market corrections reflect global macro pressures and forced liquidity selling, not invalidated investment theses," said Radhika Gupta, MD & CEO, Edelweiss Mutual Fund. "Large caps offer relative stability, while mid and small caps present selective opportunities," she said.

FPIs net bought shares worth ₹871 crore on Wednesday. Domestic institutions were net buyers of ₹643 crore. Technical analysts said the Nifty 50 faces immediate resistance around 22,780-22,800, while support is placed near 22,500-22,400.

"A sustained move above resistance could open the way toward 23000-23100, whereas a breakdown below support may drag the index toward 22,200," said Gaurav Garg, head - research, Lemonn.

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