Indian stock indices rebounded as the Nifty 50 surpassed the 23,000 mark, led by banking and IT shares. However, Nestlé India shares dropped 9% despite reporting a 36.3% profit rise, as investors weighed the management's warning about food inflation and rising commodity costs.
Indian stock markets saw a sharp recovery on Thursday, with major indices crossing significant milestones. The S&P BSE Sensex gained 1,527 points to close at 74,309, while the NSE Nifty 50 rose to 23,052. This marks the first time the Nifty has traded above the 23,000 level in twelve sessions, as buying interest returned to heavyweights in the banking and IT sectors.
The rally was driven primarily by large-cap stocks. Banking shares and IT companies provided the main support, with major names like Tech Mahindra and Bharti Airtel climbing over 3.8% each. Heavyweights such as Reliance Industries and ICICI Bank also helped lift the indices. This focus on large, established companies suggests that money is shifting away from riskier assets in the current environment.
However, the broader market trend remained weak. The Nifty Smallcap 100 index fell 1.11%, and the Nifty Microcap 250 index dropped 1.39%. This difference in performance shows that while large companies are finding buyers, there is still caution toward smaller stocks, where investors may be concerned about valuations or slower business growth.
Nestlé India shares faced intense selling pressure, declining nearly 9% during the session. The reaction was surprising to some, given that the company reported a net profit growth of 36.3% and a total revenue of ₹6,788.3 crore for the September quarter. The negative sentiment stemmed from the company's commentary regarding future costs. Nestlé India highlighted that food inflation and rising commodity prices are creating challenges for the business.
For investors, this highlights how the market often looks beyond the current profit figures. In the FMCG sector, companies are sensitive to the price of raw materials like coffee, milk, and wheat. When companies signal that these costs may stay high, it can lead to fears that future profit margins might shrink. Even if a company reports strong quarterly numbers, the market often adjusts the stock price if it believes the future outlook is less certain due to inflation.
Looking ahead, market participants will monitor whether larger companies can maintain their current growth levels and how FMCG players manage input costs. The next important step for investors will be to track the management commentary of other major consumer goods companies to see if they are facing similar pressures from commodity inflation.