Sensex Slips, Nifty Dips: Is This a Market Correction?
Sensex and Nifty Decline for Second Day
Indian benchmark indices, the Sensex and Nifty, experienced a downward trend for the second consecutive day on May 28th. The decline was primarily driven by significant losses in the automobile and fast-moving consumer goods (FMCG) sectors.
At 11:50 am, the Sensex was down 181.12 points, or 0.22%, at 81,370.51, and the Nifty fell 54.35 points, or 0.22%, to 24,771.85.
Mid and Smallcap Stocks Shine
Despite the broader market weakness, mid and smallcap stocks continued their impressive run, registering their fourth consecutive day of gains. These smaller companies outperformed the headline indices for the second day in a row, indicating potential resilience in the market.
According to Devarsh Vakil, Head of Prime Research at HDFC Securities, this outperformance is partly driven by strong Q4 earnings from midcap companies, which has helped reduce their high valuations.
ITC Takes a Hit
ITC Ltd., a major player in the FMCG sector, saw its shares drop over 3% on May 28th. This decline followed the sale of a substantial stake in ITC by British American Tobacco Plc (BAT). BAT sold 32 crore shares, or 2.57% of its stake in ITC, worth Rs 13,344 crore. This marked the second such sale by BAT in recent times.
LIC Gains Ground
In contrast, LIC shares surged almost 7% higher, even after releasing mixed quarterly results (Q4). Most brokerages remain optimistic about LIC’s future, citing improving margins and attractive valuations as key growth drivers. Analysts highlighted the positive impact of a higher contribution from non-participating (non-par) policies on LIC’s Value of New Business (VNB) margin in Q4.
Management at LIC also expressed confidence in a rebound in premium growth.
Market Outlook
Sameet Chavan of Angel One commented on the Nifty’s trading pattern, noting it remains within a defined range with 25,100 acting as a significant resistance level and 24,450 as a strong support. While the overall trend is positive, the short-term outlook appears cautious due to intraday selling at higher levels and the formation of a double top pattern on the hourly chart.
According to Chavan, a decisive move above 25,100 is crucial to spark broader buying interest and negate the double top pattern. On the downside, the 20-day Exponential Moving Average (20DEMA) around 24,600 offers immediate support, followed by a key support level at 24,450. A clear directional move is anticipated only once the index breaks out of the 24,450-25,100 range.
Top Gainers and Losers
Bharat Electronics, HDFC Life, Bharti Airtel, Bajaj Finance, and Adani Ports were among the top gainers on the Nifty. In contrast, ITC, Bajaj Auto, Nestle, Apollo Hospitals, and JSW Steel were the major laggards on the index.
