Indian Stock Market Posts Modest Decline Amidst Profit Booking on Derivatives Expiry Day

The Indian equity market saw benchmark indices, the S&P BSE Sensex and NSE Nifty50, end slightly lower on Tuesday. The Sensex slipped 75.11 points to close at 84,703.73, while the Nifty50 fell 29.85 points to settle at 25,936.20. This movement was largely driven by profit booking on the monthly derivatives expiry day, a typical occurrence, and subdued global cues.

Broader markets displayed mixed performance, but specific sectors showed strength. Vinod Nair, Head of Research at Geojit Financial Services, highlighted that metals gained on renewed optimism from China's announcement to curb steel overcapacity and potential progress in US-China trade relations. Public Sector Undertaking (PSU) banks also outperformed due to reports of a possible increase in Foreign Institutional Investor (FII) holding limits. Conversely, sectors like IT, FMCG, and real estate experienced mild pressure.

Technical analysts, including Rupak De, Senior Technical Analyst at LKP Securities, observed that the broader uptrend remains intact. De noted that the Nifty trading above the 21-Exponential Moving Average (EMA) and an RSI in a bullish crossover suggests continued positive momentum. Key support is seen at 25,850, with a potential rally towards 26,300 if the index crosses 26,000.

Ponmudi R., CEO of Enrich Money, indicated cautious trading ahead of the US Federal Reserve's policy outcome, with the Nifty50 largely trading within the 25,800–26,000 range. A late recovery in the session suggested underlying strength entering the new trading series.

**Impact** Analysts anticipate a decrease in volatility now that the expiry pressures have passed. A sustained move above 26,000 could push the Nifty higher, while a fall below 25,800 might signal short-term weakness. The Bank Nifty outperformed, holding firmly above the 58,000 support zone, indicating potential further momentum if it stays above 57,800.

**Difficult Terms** * **Derivatives Expiry**: Refers to the date when futures and options contracts must be settled. This often leads to increased trading volume and volatility as positions are closed or rolled over. * **Global Cues**: Refers to economic news, trends, or events from international markets that can influence investor sentiment and trading decisions in domestic markets. * **Broader Markets**: Encompasses the performance of mid-cap and small-cap stocks, as opposed to the large-cap stocks that typically constitute major indices like the Sensex and Nifty. * **PSU Banking**: Refers to banks that are owned and controlled by the Indian government. * **FII Holding Limits**: Regulations specifying the maximum percentage of shares that Foreign Institutional Investors can own in an Indian company. * **21-EMA**: A technical analysis indicator (Exponential Moving Average) that smooths price data by taking a weighted average, giving more weight to recent prices. Used to identify short-term trends. * **RSI**: Relative Strength Index, a momentum oscillator measuring the speed and change of price movements to identify overbought or oversold conditions. * **Bullish Crossover**: A technical signal indicating a potential upward price trend, often seen when a shorter-term moving average crosses above a longer-term one, or an oscillator moves into positive territory. * **IT**: Information Technology sector. * **FMCG**: Fast-Moving Consumer Goods sector.