Sensex, Nifty resume fall after one-day pause; what next for markets?

On the sectoral front, IT stocks continued to demonstrate relative resilience, supported by recent earnings-led momentum. Energy and FMCG stocks also performed well. However, weakness across several other sectors, including pharma, financials and auto, limited the market's ability to sustain gains.

Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd (MOFSL), attributed the decline to profit booking following the sharp previous-session gains.

"Indian markets are likely to remain lacklustre amid mixed cues. Elevated crude oil prices and persistent geopolitical tensions continue to weigh on global sentiment, while the ongoing Q2 FY27 earnings season and optimism around a potential review of capital gains tax and securities transaction tax provide some domestic support. Brent crude remained above $106/barrel, keeping supply-side and inflation concerns elevated. Markets are likely to see stock-specific action as the Q2 FY27 earnings season gathers pace. Key data releases include US CPI inflation today, followed by UK GDP, US PPI and retail sales tomorrow," he also said.

Ajit Mishra, SVP (Research) at Religare Broking, also noted that markets surrendered part of the previous session's sharp gains today as profit booking resurfaced amid persistent macroeconomic concerns.

"Macroeconomic headwinds continued to weigh on sentiment. Brent crude remained elevated around $106 per barrel amid geopolitical and supply-side concerns, while persistent foreign portfolio outflows reinforced caution. The rupee strengthened further following the RBI's recent measures to curb speculative activity and support currency stability. Meanwhile, investors remained focused on the ongoing earnings season for cues on corporate performance and the sustainability of the recent rebound," Mishra added.

Vinod Nair, Head of Research at Geojit Investments, said investors turned cautious ahead of key US inflation data. "A hotter-than-expected domestic WPI print pushed bond yields higher, reviving concerns over a tighter monetary policy trajectory and weighing on automobiles, private banks and metals. Meanwhile, encouraging business updates from IT, FMCG and PSU banks reinforced investors' preference for fundamentally resilient companies with stronger earnings visibility amid a challenging macro backdrop," he also said.

Nifty outlook

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, stated, "A small negative candle was formed on daily charts that signals consolidation movement in the market after a sharp upmove seen on Tuesday. A decisive close above 22,800 is likely to negate the bearish setup.

Shetti also mentioned, "Nifty is currently placed at the crucial resistance around 22,700-22,800 levels, and a decisive breakout of this hurdle could open further short covering in the market towards 23,100-23,200 levels. Any weakness from here could find support around 22,300 level."