Indian equities snap four-day run as IT and financial stocks drag Nifty 0.36%

Indian equities reversed early gains and ended lower, ending a four-session recovery. Selling in technology, financial and consumer stocks outweighed the support from global markets and softer crude prices.

The immediate pressure came from large IT names. TCS, Infosys, HCL Technologies and Tech Mahindra declined after CLSA said management commentary ahead of the September-quarter results remained cautious. The brokerage linked the cautious outlook to subdued discretionary technology demand, geopolitics, higher interest rates and inflation. Goldman Sachs also flagged subdued demand concerns, while HCL Technologies was described as having the more resilient commentary among the large companies.

Coal India was among the strongest gainers after Morgan Stanley upgraded the stock to overweight from equal-weight, citing an improving earnings outlook. Eternal, InterGlobe Aviation, Titan and Dr Reddy’s Laboratories also advanced. On the weaker side, Tata Consumer Products, Nestle India, Bajaj Finserv and Bajaj Finance were among the notable drags. Reports attributed the broader decline to selling in IT, PSU banks and oil and gas, but did not identify a separate company-specific trigger for the FMCG and NBFC moves.

The session opened with support from Wall Street’s technology-led gains, firmer Asian markets and lower US Treasury yields. That support did not persist as domestic selling intensified. Traders also remained attentive to possible US-Iran diplomatic discussions at the United Nations General Assembly and reports of a possible reopening of the Strait of Hormuz, which helped ease some oil-related concerns but kept geopolitical risk in focus.

The market’s response suggests that domestic earnings concerns were more influential than the initial global risk-on signal. CLSA’s comments put the September-quarter technology outlook at the centre of the reversal, while the performance of Bajaj Finserv and Bajaj Finance showed that financial stocks also remained a source of pressure. The implication for the next session is that global cues may continue to set the opening tone, but stock-specific earnings expectations are likely to determine whether that support holds.

The Reserve Bank of India remained a focus in money markets after Reuters reported that sustained bond sales, foreign-exchange swaps and rupee support had reduced surplus banking-system liquidity. Bankers cited surplus liquidity of Rs 4.92 lakh crore on September 21, down 55% from a record Rs 11.16 lakh crore about two weeks earlier. Reuters reported that the RBI had sold Rs 75,000 crore of bonds during the previous week and planned another Rs 25,000 crore operation.

The liquidity tightening matters for banks and rate-sensitive assets because it reduces the cash surplus available to the banking system, even as the central bank manages currency and bond-market conditions. The Finance Ministry’s Department of Financial Services also asked public-sector banks to maintain cash availability and alternative channels ahead of a proposed three-day bank strike. Conciliation talks were scheduled for September 22; the ministry said the government had kept the productivity-linked incentive scheme in abeyance while the five-day workweek demand remained under examination.

No new CPI, IIP, GST, trade or PMI release for September 22 was identified in the available material. The latest figures cited were August CPI inflation of 4.82% and July IIP growth of 6.70%; these were not new releases during Tuesday’s session.

The external backdrop was initially supportive. Wall Street’s previous session was led by technology stocks, with the Nasdaq reaching a record close, while Asian equities broadly advanced on chip-sector strength. The US 10-year Treasury yield eased below 5%, reducing one source of pressure on emerging-market assets. The dollar remained firm, however, and Brent crude was still near the $100-a-barrel level despite its recent decline.

For India, softer oil prices can reduce pressure on the import bill, the rupee and imported inflation. That benefit was not enough to offset domestic equity selling. Foreign institutional investors sold Rs 576.20 crore of Indian equities on September 21, while domestic institutional investors bought Rs 2,797.27 crore. The flow data showed domestic buying cushioning, but not eliminating, the effect of foreign selling.

The corporate news flow was selective rather than dominated by a large earnings release. Pace Digitek gained after its subsidiary secured a Rs 488.46-crore order from NTPC GE Power Services. Transrail Lighting advanced on news of increased conductor-manufacturing capacity, while Unicommerce Esolutions rose after announcing a partnership with The Sleep Company.

The available reports included mixed company-level profit updates but did not provide a market consensus comparison. Augmont Enterprises reported a 15.3% fall in profit, while Lumino Industries reported a 32.4% increase. Canara Bank disclosed that Moody’s Ratings had assigned a Baa3 senior unsecured rating, and Suryoday Small Finance Bank approved a plan to raise up to Rs 200 crore through Lower Tier II non-convertible debentures.

Aequs said its board would consider a proposal for a preferential issue of warrants. The available material did not provide the proposed issue size or terms. No major management change with a clear index-level market impact was identified.

The primary-market calendar remained active. The NSE issue moved to allotment after receiving 5.71 times subscription, with refunds and share credit expected on September 23 and listing scheduled for September 24 on the BSE. The issue’s size was reported as Rs 22,569 crore in the available material.

Two SME issues, Anand Seamless and Himalaya Nutravedics, opened for subscription and are scheduled to close on September 24. Pine Labs also saw a sizeable block transaction involving 4.97 crore shares, or about 4.3% of its equity; reports linked the sale to Mastercard Asia-Pacific’s planned exit. The available reports did not provide a final transaction value for the completed trade.