Sensex, Nifty 50 Face Volatile Seesaw as Selling Pressure Wipes Out Early Gains

Sensex, Nifty 50 Face Volatile Seesaw as Selling Pressure Wipes Out Early Gains​

Indian benchmark indices exhibited significant volatility during the session on July 16, ultimately closing in a flat zone after an early morning rally. While the market opened with positive momentum supported by buying interest in IT and select heavyweight stocks, selling pressure intensified in the second half of the day.

The Sensex ended the session up a marginal 1.44 points at 77,186.87. Meanwhile, the Nifty was down 5.75 points, or 0.02 percent, closing at 24,072.75. This movement highlights a day where gains were quickly erased as profit booking outweighed initial buying enthusiasm.

Global Market Cues and Semiconductor Selloff Impacts​

The domestic market faced headwinds from weak global cues, particularly from the technology sector. Asian equities fell for a second consecutive day as investors reacted to a selloff in chipmakers. This decline was driven by mounting concerns that massive artificial intelligence investments may not justify current lofty valuations.

In the United States, chip stocks continued to lead broader market moves, pulling both the Nasdaq and the S&P 500 lower on Thursday. The Dow Jones Industrial Average fell 105.32 points, or 0.20 percent, to 52,553.32. Specifically, the S&P 500 lost 38.63 points, or 0.51 percent, to 7,533.77, while the Nasdaq Composite shed 387.28 points, or 1.47 percent, to 25,881.95.

Currency Fluctuations and Commodities Surge​

The Dollar Index held steady on Friday but faces a potential weekly decline due to a softer-than-expected U.S. inflation report. This data has led traders to reduce bets on imminent Federal Reserve rate hikes, though escalating tensions in the Middle East have weighed on investor sentiment. US Bond yields remained relatively stable, with the 10-year Treasury up marginally at 4.55 percent and the 2-year Treasury at 4.14 percent.

In the commodities space, crude oil prices showed significant strength. Brent crude futures rose 0.7 percent to $84.83 a barrel, while U.S. crude advanced 0.7 percent to $79.49 per barrel. Notably, both Brent and U.S. crude are set to rise more than 11 percent for the week, marking their largest gains since April. Conversely, gold remains on track for its biggest weekly loss since early June as geopolitical risks persist.

Institutional Flow Dynamics and GIRF Nifty Outlook​

Data on fund flows reveals a tug-of-war between domestic and foreign investors. Foreign institutional investors (FIIs) continued their selling spree for the fourth consecutive session on July 16, offloading Indian equities worth Rs 4,200 crore. However, domestic institutional investors (DIIs) provided a cushion by extending their buying streak to seven straight sessions, purchasing shares worth Rs 2,986 crore.

Looking ahead, the GIFT Nifty was trading firm at around 24,143 in early trade. This suggests that Indian markets are expected to experience a flat start with a positive bias for the upcoming session. Investors remain watchful of global cues as the market navigates this period of high volatility and mixed institutional activity.