Nifty 50 at three-week low, Sensex drops 500 points as heavyweights continue to drag

Domestic equities extended losses on Wednesday, with the Nifty index slipping further and closing at its lowest level in three weeks, as financial stocks underperformed, led by heavyweights HDFC Bank and ICICI Bank.

The broader market also showed weakness, while select sectors like pharmaceuticals showed resilience.

The Nifty 50 index ended the day at 24,199, down 137 points, or 0.56%, after briefly dipping below Friday’s low of 24,181. The benchmark Sensex fell by 502 points, or 0.62%, to settle at 80,182.

Key indices in the US closed lower overnight, and those in Asia were also largely down in early trade. Caution ahead of the US Federal Reserve's policy decision early on Thursday was also a factor behind the decline in the market as there is lack of clarity on the Fed's outlook and the likelihood of future rate cuts, analysts told Cogencis Information. The Federal Open Market Committee is expected to cut key rates by 25 basis points.

The financial sector emerged as the primary drag on market sentiment, with HDFC Bank and ICICI Bank contributing significantly to the Nifty's decline. HDFC Bank dropped by 1.7%, while ICICI Bank fell 1.4%, reflecting broader concerns over elevated interest rates and potential liquidity tightening.

The Nifty Bank index plunged by 1.3%, closing 695 points lower at 52,140. The Midcap index also ended the session in the red, down by 379 points, or 0.64%, at 58,723.

Tata Motors was the top loser on the Nifty, shedding 3% at the end of the session today.

NMDC, meanwhile, saw a sharp 6% decline after reports surfaced suggesting that the Karnataka government may increase duties on iron ore exports.

Pharmaceutical stocks emerged as notable gainers amid the market downturn. Dr. Reddy’s Laboratories (DRL), Cipla, and Aurobindo Pharma saw strong buying interest, with DRL rising 2.4%, Cipla up 2.2%, and Aurobindo Pharma climbing 1.9%.

Shares of ITC ended the day in the green, gaining 1.3%, after the company announced that January 6 would be the record date for its proposed demerger. The demerger will result in the creation of two distinct entities, one for its FMCG and hospitality businesses and the other for its paperboards and packaging division.

Newly listed stocks saw strong performances, with MobiKwik, Vishal Mega Mart, and Sai Life Sciences seeing significant gains. MobiKwik surged by 39%, Vishal Mega Mart jumped 59%, and Sai Life Sciences saw a 90% rise. These companies capitalized on strong investor interest following their successful initial public offerings (IPOs), despite the broader market's weakness.