Sensex Tumbles 338 Points After Early Rally Fades as Eternal, Midcaps Slide Despite IT Stocks Hitting Highs

MUMBAI, India — India's Sensex fell for a second straight session Wednesday. A strong opening rally gave way to selling in the afternoon, as losses in consumer, financial and auto stocks outweighed gains in information technology shares.

The 30-share BSE Sensex fell 338.55 points, or 0.46%, to close at 73,514.35. The broader NSE Nifty 50 dropped 150.50 points, or 0.66%, to 22,738.45.

From gain to loss

The session started well. The Sensex opened at 74,337.93, nearly 500 points above Monday's close of 73,852.90, as investors followed gains in Asian markets. By 11 a.m., it was still up more than 320 points.

Selling picked up around midday. By 3 p.m., the Sensex was down about 580 points at 73,272.28, after touching a low of 73,356.71 earlier in the afternoon. A small recovery in the final minutes reduced the loss.

From its opening level to its low, the index swung by nearly 1,000 points in one session.

Eternal leads losses

Among the biggest decliners was Eternal, the parent company of food delivery platform Zomato. Its shares fell about 4.5% to 305.65 rupees on the National Stock Exchange as investors waited for its September-quarter results.

Bajaj Finance and Eicher Motors were also among the top losers in the Nifty 50 at midday. Auto, banking and real estate stocks were weak.

IT stocks hold firm

Technology stocks went against the trend. The Nifty IT index rose to an eight-month high of 32,348 as Infosys and Tata Consultancy Services, both Sensex members, gained. L&T Technology Services jumped about 15% during the session.

The strength in IT shares limited the Sensex's losses, since software exporters make up a significant share of the index.

Earnings drive individual moves

The September-quarter earnings season produced sharp moves in several stocks:

Vishal Mega Mart fell about 6% after its profit margin narrowed. Just Dial dropped more than 6% after a nearly 10% fall in quarterly net profit. SML Mahindra hit its 10% lower circuit after a 44.5% drop in quarterly profit. Piramal Finance rose about 4.6% after a 64.8% jump in net profit. Hindustan Zinc gained about 4% after analysts said silver prices would be key to its future earnings growth.

Defense stocks also fell, with some losing up to 6%.

Small and midcaps hit harder

Losses were much steeper outside the large-cap stocks. Late in the session, the Nifty MidCap 100 was down 1.82% and the Nifty SmallCap 100 had fallen 2.48%. That shows selling spread widely across the market, beyond the headline index.

Two-day losses top 1,200 points

Wednesday's decline followed a heavy selloff Monday, when the Sensex fell 876.37 points, or 1.17%. Selling in large private-sector lenders such as HDFC Bank and Axis Bank drove that drop, as investors reacted to concerns about pressure on net interest margins in their quarterly results.

Over the two sessions, the Sensex has lost about 1,215 points.

Ajit Mishra, senior vice president of research at Religare Broking, said after Monday's session that the Nifty's close near its day's low was "reflecting the prevailing weakness in market sentiment."

Jio IPO draws institutional demand

The market's attention was also on the initial public offering of Jio Platforms, the digital and telecom arm of Reliance Industries, which opened for subscription Wednesday. By mid-afternoon on the first day, the offer was subscribed 2.22 times. Qualified institutional buyers bid for 6.72 times the shares reserved for them. Non-institutional and retail investors had subscribed 0.86 times and 0.57 times their portions.

Global factors

International conditions remain mixed. Crude oil prices have stayed high, near $98 a barrel, because of supply concerns in the Middle East. High oil prices are a key risk for India, which imports most of its oil.

U.S. inflation data last week also revived worries that global interest rates will stay high, affecting foreign investor demand for emerging market stocks.

Investors will look to upcoming results from major Indian companies and from U.S. technology giants, including Meta Platforms and Tesla, for direction. Analysts say the key question is whether the earnings season brings enough positive surprises to support the market after this week's losses.