Stock Market Falls for Second Day: Sensex Drops 170 Points, Nifty Ends at 25,405 — Is the Uptrend Over?

Indian stock market closed lower for the second day in a row on Thursday, July 3. Although it opened strong on hopes of a small trade deal between India and the U.S., the early gains didn't last. In the second half of the session, profit booking and uncertain global cues led to selling pressure, pulling the market down from its highs.

Sensex fell by 170 points or 0.20% to close at 83,239, while the Nifty 50 slipped 48 points or 0.19% to end at 25,405. Trading volumes on the NSE cash market were 8% lower compared to yesterday, indicating a moderation in activity.

Key Reasons for the Market Dip:

The market slipped in the last hour due to profit booking, as investors turned cautious. Uncertainty around the ongoing India-US trade talks, especially disagreements over agriculture and genetically modified crop imports, also added to the pressure.

Investors are being careful ahead of the upcoming Q1 FY26 earnings results. Global signals were mixed, even though U.S. tech stocks performed well and a new trade deal between the U.S. and Vietnam was announced.

"The domestic equity market continued to consolidate as profit booking followed last week's sharp rally. Investors remain watchful of developments surrounding the potential U.S.-India trade agreement, with the 90-day pause nearing its end.

FIIs have turned cautious in the recent days due to premium valuation. Despite these headwinds, sentiment remains supported by optimism surrounding the upcoming earnings season and the weakening U.S. dollar index," said Vinod Nair, Head of Research at Geojit Investments.

Top Gainers and Losers:

Dr. Reddy's Labs, Apollo Hospitals, and Hero MotoCorp were the top gainers on the Nifty, followed by ONGC and Maruti Suzuki, which also closed in the green. On the other hand, SBI Life Insurance, Kotak Mahindra Bank, Bajaj Finance, JSW Steel, and Bajaj Finserv were among the top losers.

On the sectoral front, pharma, media, auto, oil & gas, and consumer durables saw modest gains of 0.3% to 1%, while PSU banks, real estate, metal, and telecom sectors declined, with PSU Bank being the worst performer of the day.

In the broader markets, The BSE Midcap Index fell slightly by 0.06%, marking its third straight loss, while the Smallcap Index rose 0.47%, breaking a two-day losing streak.

More than 140 BSE-listed stocks hit 52-week highs, including Apollo Hospitals, Divis Labs, MRF, and Max Healthcare.

"From a technical perspective, Nifty seems to be in a correction phase for the last four trading sessions. Previous swing highs of 25317 and 25222 could act as support in this correction phase of Nifty. On the higher side, a level of 25600 could offer immediate resistance to the index," said Nandish Shah - Deputy Vice President, HDFC Securities.

Stock Highlights:

• Nykaa dropped 4% after a large stake sale by the Banga family.
• Kotak Mahindra Bank slipped nearly 2% after Macquarie downgraded the stock.
• DMart shares fell post a disappointing Q1 update.
• MobiKwik gained 2% after its arm received SEBI approval to operate as a stockbroker.
• Motilal Oswal Financial Services Ltd (MOFSL) jumped 8% after its AUM crossed Rs 1.5 lakh crore.

Rupee VS Dollar:

The Indian Rupee ended 39 paise stronger against the US dollar on Thursday, closing at 85.32. This is the rupee's highest closing level since May 27. On Wednesday, it had closed at 85.71 per dollar.

"The Indian rupee strengthened to its highest point in a month, primarily due to anticipated foreign capital inflows and a positive outlook on an impending trade agreement with the United States. In the near term, the spot USD/INR exchange rate is expected to find support at 84.95, while encountering resistance at 85.70," Dilip Parmar - Senior Research Analyst, HDFC Securities.

Global Markets:

U.S. markets closed at record highs, with the S&P 500 and Nasdaq lifted by tech stock gains and easing trade tensions. In Asia, most markets ended higher ahead of a crucial U.S. jobs report, which could influence the Federal Reserve's next move on interest rates.

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