Muted start for Indian markets in 2024: tech and financials weigh, but mid-caps show promise

The blue-chip Nifty 50 dipped 0.08% to settle at 21,714.15 points, while the S&P BSE Sensex closed 0.15% lower at 72,132.72. The drag came primarily from high-weightage sectors like financials (-0.25%) and information technology (-0.25%), reflecting profit-booking after their strong run in 2023.

Indian stock markets began the new year on a cautious note, as the benchmark Nifty 50 and Sensex indices edged lower on Monday. The subdued performance followed a stellar 2023, which saw both indices gain over 20%. While concerns about high valuations in certain sectors and global uncertainties cast a shadow, pockets of optimism emerged, particularly in mid-cap stocks and sectors less exposed to global headwinds.

The blue-chip Nifty 50 dipped 0.08% to settle at 21,714.15 points, while the S&P BSE Sensex closed 0.15% lower at 72,132.72. The drag came primarily from high-weightage sectors like financials (-0.25%) and information technology (-0.25%), reflecting profit-booking after their strong run in 2023.

In contrast, the domestically-oriented small-cap (.NIFSMCP100) and mid-cap (.NIFMDCP100) indices defied the overall trend, climbing 0.3% each. Analysts at Kotak Institutional Equities cited “reasonable valuations” in large-caps and their positive outlook on the segment while acknowledging overvaluation concerns in other sectors and stocks.

Oil and gas stocks bucked the negative trend, rising 0.8% thanks to falling crude prices and their positive implications for oil importers like India. Airline operators like Interglobe Aviation and SpiceJet witnessed gains of 1.5% to 3%, spurred by a reduction in aviation turbine fuel costs. Capital goods giant Bharat Heavy Electricals (BHEL) surged 4.4% after securing a 190 billion rupees contract from NLC India, while HFCL climbed 3% on a $135 million order win.

Grasim Industries gained 1.5% to become one of the top Nifty 50 gainers following the commissioning of additional capacity for advanced materials manufacturing. On the flip side, Eicher Motors, the top Nifty 50 percentage loser, shed 1.6% after receiving a 1.3 billion rupees goods and services tax (GST) demand order. Mahindra and Mahindra lost 1% after a 41.2 million rupees tax penalty levied by the government, though the company plans to challenge the order.