Market Wrap: IT stocks Sensex, Nifty drag down on Powell’s rate comments

Indian benchmark equity indices closed lower in a volatile session on Monday, weighed down by IT stocks after Federal Reserve Chairman Jerome Powell signaled that stronger US economic growth would cut interest rates.

The BSE Sensex fell 241 points or 0.31% to close at 77,339, while the NSE Nifty fell 79 points or 0.34% to 23,453.

All listed companies on BSE have a market capitalization of Rs. 1.42 lakh crore reduced to Rs. 429.18 lakh crore has happened. Market breadth was skewed in favor of the bears. On the BSE, around 1,613 stocks advanced, 2,484 declined and 127 remained unchanged.

TCS, Infosys, NTPC, HCL Tech, Axis Bank, and Tech Mahindra were the top gainers in the Sensex, falling up to 3%. On the other hand, Tata Steel, HUL, M&M, Nestle India, SBI and Adani Ports closed higher.

The Nifty IT index ended 2.3% lower, led by TCS, Mphasis and LTIMindtree. The decline followed comments from Federal Reserve Chairman Jerome Powell, who suggested there was no urgency to cut interest rates due to strong economic growth in the United States.

Gas distributors Indraprastha Gas and Mahanagar Gas fell by 20% and 14% respectively after the government reduced the allocation of gas under the regulated price. This could result in a sharp reduction in the profit margins of these companies, Jefferies said.

In other stocks, Honasa Consumer shares hit an early 20% lower circuit after the parent company of D2C brand MamaEarth reported weak earnings for the quarter ended September, posting its first quarterly loss in five quarters.

A weak earnings season has dragged markets down from all-time highs, with foreign outflows of nearly $15 billion over the past 34 consecutive sessions.

Meanwhile, the US 10-year Treasury yield rose to 4.45% on Monday after the Federal Reserve chair signaled a slower rate cut. Higher US yields make emerging markets like India less attractive to foreign investors, putting pressure on domestic markets.