Domestic equity benchmarks opened on a weak note on Thursday, retreating after the previous session’s sharp rally, as investors grappled with renewed volatility and persistent geopolitical uncertainty.
The BSE Sensex declined 354.93 points, or 0.46%, to 77,207.97 in early trade. The Nifty 50 slipped 78.45 points, or 0.33%, to 23,918.90, falling below the psychologically important 24,000 level around 9:20 am.
Despite the weak opening, both indices attempted a modest recovery, although intraday swings remained sharp, signalling a cautious undertone in the market.
Among stocks, Adani Ports and Special Economic Zone dropped around 2%, emerging as one of the key laggards and adding pressure on the benchmarks.
The decline comes a day after a strong rebound in equities, when markets surged on the back of easing crude oil prices following a temporary two-week ceasefire between the US and Iran. The rally was also aided by short-covering and renewed buying interest in beaten-down financial stocks. However, the sustainability of that uptrend is now being questioned as fresh tensions in West Asia—particularly concerns around a potential Israeli strike on Lebanon—cloud the outlook.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the previous session’s rally reflected both valuation comfort and technical factors like short covering. He noted that while the Reserve Bank of India’s recent monetary policy decision was largely on expected lines, the central bank’s commentary on growth remains a supportive factor for equities.
“The RBI’s assessment that growth impulses remain strong, supported by robust private consumption and sustained investment demand, augurs well for the market,” he said. With GDP growth projected at 6.9% and inflation at 4.6% for FY27, nominal GDP growth could reach around 11.5%, potentially translating into nearly 12% earnings growth.
That said, Vijayakumar warned that crude oil remains the key variable to watch. Any sharp spike in oil prices due to escalating geopolitical tensions could quickly reverse recent gains and weigh on market sentiment.
He added that the sharp bounce in stocks previously hit by foreign portfolio investor (FPI) selling indicates latent strength in the market. “Fairly valued stocks that were depressed by selling and shorting can rebound at any time,” he said, stressing that patience will be crucial for investors navigating the current phase of volatility.