Markets End Muted: Nifty Closes Below 25,200, IT Stocks Slide – 5 Key Highlights Investors Must Know

Nifty closes below 25200 for the first time in the week as Indian equity benchmarks witnessed a weak end to Friday’s trading session. The overall market sentiment remained subdued due to multiple factors including global headwinds, muted earnings, and widespread sectoral selling.

The BSE Sensex fell sharply by 689.81 points to settle at 82500.47, while the NSE Nifty 50 index dropped 205.40 points, closing the day at 25149.85. The Nifty Bank index also declined, finishing the session at 56754.70, down by 0.35%. Friday’s slump extended a week-long trend of volatility and investor uncertainty, driven primarily by underperformance in the IT sector and pressure across major index heavyweights.

Below are the five key takeaways from the market performance that led to the benchmark Nifty closing below 25200.

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1. Nifty Closes Below 25200 as Earnings Season Starts Soft

The biggest catalyst for Friday’s downtrend was the market’s reaction to the early signs from the Q1 FY26 earnings season. With expectations already tempered due to macroeconomic pressures, the actual earnings results from frontline companies like TCS failed to spark optimism.

The market’s nervousness was also amplified by global developments, especially the United States raising the possibility of imposing 35% tariffs on Canadian imports. Although India is not directly involved, such moves trigger fears of widespread trade protectionism that could hurt global economic recovery and investor risk appetite.

Vinod Nair, Head of Research at Geojit Financial Services, pointed out that “The negative sentiment was driven by a mix of weak earnings and international trade risks. Investors are becoming cautious, and this is reflected in the subdued participation across sectors.”

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2. IT Sector Takes the Biggest Hit, Weighing Down Benchmarks

The most significant drag on the indices came from the IT sector. The Nifty IT index slumped by nearly 3% during the session, making it one of the worst-performing sectoral indices of the day. Technology stocks across the board were under pressure due to disappointing quarterly results and concerns over order deferrals.

TCS, India’s largest IT services company, led the decline with a 3% fall, following its Q1 results that did not meet street expectations. Other tech majors such as Wipro, Infosys, HCL Tech, LTI Mindtree, Coforge, and Oracle Financial Services also posted significant losses ranging between 1% and 3%. Even relatively stable players like Tech Mahindra could not escape the sell-off.

Investors are concerned that a slowdown in digital transformation budgets and deferred deal closures will lead to a downward revision in earnings estimates for the financial year 2025-26.

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3. Select Stocks Shine Amid Broad Weakness

While broader markets struggled, a few select stocks managed to post gains, suggesting that there are still pockets of investor confidence in the market. Top gainers on the day included Hindustan Unilever, Sun Pharma, Axis Bank, NTPC, and Eternal.

The common factor among these gainers was their defensive nature. With broader markets showing signs of stress, investors flocked to FMCG and utility sectors, which are traditionally considered safe during times of volatility. For instance, Sun Pharma gained on expectations of stable earnings and consistent demand, while NTPC benefited from a rally in energy and utility stocks.

The gains in Axis Bank were driven by positive sentiment ahead of its earnings, and Hindustan Unilever held strong as consumer demand remains resilient despite inflationary pressures.

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4. Index Heavyweights Among Major Laggards

Another reason Nifty closed below 25200 was the steep correction in heavyweight stocks that dominate the benchmark indices. Major players like Reliance Industries, Tata Motors, Bharti Airtel, Titan, M&M, and TCS all ended the day in the red.

Reliance Industries, which has a strong weightage on both Sensex and Nifty, was hit by profit booking and concerns over global energy prices. Meanwhile, Bharti Airtel and Tata Motors faced pressure from weak global cues and reduced investor appetite for high-beta stocks.

M&M dropped amid worries about declining tractor volumes, and Titan also traded lower due to slowing discretionary spending in the premium consumption segment.

The weakness in these stocks heavily influenced the overall index performance and was instrumental in dragging the Nifty below the 25200 mark.

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5. Sectoral Performance: Mixed Signals from Broader Market

Though selling was widespread, a few sectors managed to post gains. Sectorally, the Glass sector stood out with a 3.11% jump in market capitalization, driven by strong demand from construction and industrial segments. The Personal Care segment followed with a 2.46% rise, benefiting from investor shift to defensives.

The Transport sector also gained 1.09%, largely due to improved freight movement and positive projections in logistics. Fertiliser stocks registered a modest gain of 0.62%, backed by positive rural demand and a favorable monsoon forecast.

On the flip side, Telecom, Auto, Realty, and Oil & Gas were all hit hard. These sectors are closely tied to global economic trends and sentiment, and the negative cues from international markets added pressure.

Prashanth Tapse, Senior VP at Mehta Equities, summed up the day’s sentiment: “Weak US and European futures and the disappointing start to the earnings season, especially from TCS, contributed to a broad sell-off. Investors should brace for increased volatility in the near term.”

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What Lies Ahead for the Markets?

Now that Nifty closes below 25200, the psychological support level has been breached, indicating that markets could remain under pressure unless fresh positive triggers emerge. The coming weeks will be crucial, as several large-cap companies are scheduled to announce their Q1 results.

Key elements investors should watch include:

• Upcoming earnings from sectors like banking, FMCG, and energy.

• Global macro data, especially from the US and China.

• Movement in crude oil and commodity prices.

• Monsoon progress and its impact on rural consumption.

• Institutional flows, particularly Foreign Institutional Investor (FII) activity.

Market watchers believe that if earnings continue to underperform, the indices may remain range-bound or trend lower. However, any positive surprise in quarterly results or easing of global trade tensions could provide a short-term rally.

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Final Thoughts

The close below 25200 on the Nifty reflects deepening investor concerns over the global and domestic economic landscape. While sectors like IT have pulled back due to weak earnings and outlook downgrades, defensive sectors and select consumption plays continue to offer some stability.

Traders are advised to remain cautious in the short term, focusing on fundamentally strong companies with resilient earnings visibility. The current market phase demands selectivity, patience, and a keen watch on both macro indicators and company-specific fundamentals.

Source: Financial Express

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