CLOSING BELL: Sensex dips 100 points, Nifty inches above 24,400; Banks, IT stocks drag

Stock market news: Benchmark indices closed mostly unchanged on Thursday, as gains in Larsen and Toubro (L&T) offset declines following weaker-than-expected earnings from Axis Bank and Nestle India.

The NSE Nifty 50 index slipped slightly by 0.03 per cent to 24,406.1 points, while the S&P BSE Sensex settled 0.14 per cent lower at 80,039.8 points.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said “Overnight slump in US equities caused a major slump in domestic markets in early trades due to heavy profit-taking in banking, IT, metals and realty stocks. However, markets recouped most of its losses towards the end with Sensex managing to close above the crucial 80k-mark amid buying in oil & gas and automobile stocks, indicating that investors are willing to bet on good fundamental sectoral stocks despite rising concerns of the stretched valuations of the Indian markets.”

Axis Bank experienced a 5 per cent decline, marking the largest drop on the Nifty, after reporting a quarterly profit that missed analysts' expectations. This underperformance negatively impacted the bank index, financial services index, and private bank index which fell between 0.5 per cent and 1 per cent.

Out of the 13 major sectors, eight declined. The broader small-cap index and mid-cap index decreased by 0.2 per cent and 0.3 per cent respectively. Analysts attributed the drop in financials partly to likely foreign selling, as foreign portfolio investors have significant holdings in the sector. Over the last two sessions, foreign investors have net sold approximately $1 billion worth of Indian shares.

Consumer goods giant Nestle India saw a 2.4 per cent drop in its share price after failing to meet first-quarter revenue and profit estimates.

In contrast, L&T shares rose by 2.8 per cent following better-than-expected first-quarter revenue and profit, helping to limit the overall market decline.

The pace of Nifty's retreat from last week's record high has accelerated since the budget announcement on Tuesday, which included a hike in taxes on derivatives trading and equity trading profits. "While the increase in short-term capital gains tax is understandable given the need to curb excessive short-term speculation, the increase in long-term capital gains is regressive, especially the optics of it," commented Abhishek Goenka, founder and CEO of treasury and wealth management firm IFA Global.

The Nifty volatility index rose to 12.62 on the day of monthly derivatives contract expiry. According to two analysts, this increase was likely due to market participants cutting or rolling over their derivatives positions.