Sensex, Nifty Close Lower For Second Day As Bajaj Finance, M&M, L&T Drag: Market Wrap

India's benchmark stock indices closed lower for the second day in a row on Monday after swinging between gains and losses, led by declines in Bajaj Finance Ltd., Mahindra & Mahindra Ltd., and Larsen & Toubro Ltd.

The auto sector dragged, whereas I.T. shares advanced in trade.

The S&P BSE Sensex closed down 140 points, or 0.21%, at 65,655.15, while the NSE Nifty 50 fell 38 points, or 0.19%, to end at 19,694.00.

"The levels near the 19,800–19,850 zone are a tough hurdle that needs to be breached to establish some conviction and proceed further for the next higher targets of 20,000–20,200 levels. The further support is seen at 19,600, while the resistance is seen at 19,850," according to Vaishali Parekh, vice president of technical research at Prabhudas Lilladher Pvt.

"With the October peak in the vicinity, expect sideways moves. Dips are likely to be limited to 19,600 to 19,570, keeping intact the prospects of an extended push towards a record peak. Meanwhile, a push above 19,765 to 19,740 could spark a few upswings, but they are likely to be challenged on the approach to 19,800," said Anand James, chief market strategist at Geojit Financial Services.

The Nifty Smallcap 250 Index rose 0.57% to hit an all-time high of 13,051.25 intraday, whereas the Nifty Midcap 150 was volatile after scaling a record high at 15,654.40. Nifty Pharma also hit a life-high by rising 0.93% to 15,950.80 intraday.

Global Markets

Asian stocks closed mixed, fueled by the waning bet that the Federal Reserve would end its hiking cycle. Japanese shares declined after hitting a 33-year high; shares rose over 1.6% in Hong Kong and rose in Australia, South Korea and China.

On Friday, the S&P 500 inched above 4,500 to notch its third straight week of gains—the longest run since July.

Here's how the Indian benchmark indices fared on Monday:

Bharti Airtel Ltd., Tata Consultancy Services Ltd., HCL Technologies Ltd., Divi's Laboratories Ltd., and Kotak Mahindra Bank Ltd. positively contributed to the Nifty 50.

Whereas, Bajaj Finance Ltd., Mahindra & Mahindra Ltd., Larsen & Toubro Ltd., ITC Ltd., and Reliance Industries Ltd. weighed on the index.

"The ongoing rally in the mother market, the U.S., triggered by declining bond yields makes the market construct slightly favourable for the continuation of the rally in India, too. Like in cricket, there will be occasional setbacks, but it is the long-term trend that matters in the market," says VK Vijayakumar, chief investment strategist at Geojit Financial Services.

The broader markets ended mixed. The S&P BSE MidCap fell 0.06%, while the S&P BSE SmallCap rose 0.39% at the close of the market on Monday.

Fourteen out of 20 sectors compiled by BSE Ltd. declined, while six sectors advanced. S&P BSE Information Technology rose the most, while S&P BSE Auto fell the most.

The market breadth was split between buyers and sellers. About 1,880 stocks rose, 1,934 declined, and 166 remained unchanged on the BSE.

Clearly, this is a buy-on-dips market. Retail investor exuberance is pushing up the broader market, Vijayakumar said. "Investors should not be blinded by the recency bias and chase small caps running away without fundamental support. In spite of recent underperformance, safety is now in large caps."