Sensex extends losses for 2nd consecutive session. Why is the Indian stock market falling? | Stock Market News

Stock market today: Indian stock market benchmarks- the Sensex and the Nifty 50- extended their losses into the second consecutive session on Thursday, February 6, ahead of the Reserve Bank of India’s (RBI) monetary policy decision on Friday. However, largely positive global cues and a decline in US bond yields capped the losses for the key indices.

The Sensex ended at 78,058.16, down 213 points, or 0.27 per cent, while the Nifty 50 settled with a loss of 93 points, or 0.39 per cent, at 23,603.35.

The BSE Midcap index underperformed, falling 0.87 per cent, while the Smallcap index ended flat.

In the last two sessions, the Sensex has declined 526 points, or 0.70 per cent, while the Nifty 50 has retreated 136 points or 0.60 per cent.

The overall market capitalisation of BSE-listed firms dropped to nearly ₹425 lakh crore from over ₹427 lakh crore in the previous session, making investors poorer by over ₹2 lakh crore in a single day.

Most sectoral indices ended lower, with the Nifty Realty (down 2.19 per cent) and Consumer Durables (down 1.84 per cent) falling 2 per cent each.

Nifty FMCG (down 0.96 per cent), Auto (down 0.93 per cent), Media (down 0.75 per cent), Metal (down 0.75 per cent) and PSU Bank (down 0.73 per cent) declined by almost a per cent each.

The Nifty Bank index ended with a modest gain of 0.08 per cent.

Nifty Pharma (up 0.64 per cent) and IT (up 0.31 per cent) ended in the green amid rupee’s weakness against the US dollar.

What drove the Indian stock market to end lower?

Here are five key reasons that experts believe contributed to the market’s poor show on Thursday: 

1. Caution ahead of RBI’s policy decision: Investors are cautious ahead of the RBI’s Monetary Policy Committee’s (MPC) interest rate decision on Friday. While there is a wide expectation of a 25 bps rate cut, there are concerns that the rate cut cycle will not be a longer one.

“Investors booked profits in rate-sensitives like realty, banking, and auto shares ahead of tomorrow’s monetary policy announcement. If there is any surprise rate cut, we may see short-term optimism,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities.

2. Weak performance of heavyweights ahead of Q3 result: Shares of Bharti Airtel, ITC, and SBI were the biggest drags on the Sensex. All three companies are set to release their December quarter earnings on Thursday.

3. Rupee’s weakness: The weakness of Indian rupee is weighing on market sentiment. According to Reuters, the rupee declined to a record low of 87.58 during the session before closing at 87.5775. The domestic currency has fallen more than 2 per cent so far this year.

4. Foreign capital outflow: After buying Indian equities worth ₹809 crore on February 4, foreign institutional investors (FIIs) resumed their selling spree on the next day. FPIs sold off Indian equities worth ₹1,682.83 crore on February 5. On the monthly scale, FIIs have been offloading Indian equities since October 2024.

5. Nifty fails to break the resistance of 23,800: The Nifty 50 rose about 0.30 per cent during the session to hit the intraday high of 23,773.55. However, it erased gains and slipped to the level near 23,600.

Rupak De, Senior Technical Analyst at LKP Securities, pointed out that the sentiment might depend heavily on Friday’s RBI monetary policy announcement.

“Technically, 23,500 may continue to act as a significant support level, but a decisive fall below it could shake the bulls’ confidence. On the higher end, resistance is placed at 23,800 and 24,050,” said De.

Shrikant Chouhan, the head of equity research at Kotak Securities, pointed out that on the daily charts, the Nifty 50 formed a bearish candle near the 50-day SMA (Simple Moving Average), which supports further weakness from the current levels. However, the short-term texture of the market is still positive.

“If the market manages to trade above 23,500, it could bounce back to 23,750-23,800. On the flip side, trading below 23,500 would make the uptrend vulnerable. Below this level, traders may prefer to exit from their long positions,” said Chouhan.

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