The Indian stock market faced continued selling pressure on Tuesday, January 20, 2025, marking the second consecutive session of declines. Market participants remained cautious amid weak global cues and concerns over trade war risks, while unimpressive third-quarter earnings added to the negative sentiment.

Market Performance Overview

The benchmark indices witnessed significant declines during the trading session. The following table summarizes the key market movements:

The 30-share Sensex fell over 400 points, representing more than 0.50% decline to reach an intraday low of 82,812.32. Meanwhile, the Nifty 50 breached the psychologically important 25,450 level on the downside, touching 25,432.60 during intraday trade.

Two-Day Market Decline

The cumulative impact of the selling pressure over two consecutive sessions has been substantial. The market performance over this period shows:

Both benchmark indices have experienced approximately 1% decline over the two-day period, with the Sensex losing more than 750 points from its previous levels.

Market Factors

Several factors contributed to the negative market sentiment during this period:

• Global Market Weakness: Weak global cues influenced domestic market performance
• Trade War Concerns: Ongoing risks related to international trade tensions
• Earnings Performance: Unimpressive third-quarter earnings results affected investor confidence
• Consecutive Session Pressure: Sustained selling pressure across two trading sessions

The combination of these factors created a challenging environment for equity markets, with investors adopting a cautious approach amid the prevailing uncertainties. The breach of key technical levels, particularly the Nifty 50 falling below 25,450, highlighted the extent of the current market pressure.

Indian equity markets are displaying clear signs of stress, with the Nifty index slipping below crucial long-term averages while the Bank Nifty demonstrates relatively better performance. Market analyst Mayuresh Joshi, Director–Research at Marketsmith India, attributes this divergence primarily to weakness in heavyweight stocks that are dragging down the broader index.

Rising Distribution Days Signal Market Pressure

Joshi highlights a concerning trend in market behavior through the lens of distribution days—trading sessions characterized by market declines accompanied by higher-than-usual volumes. This technical indicator typically suggests institutional selling pressure. "Distribution days are actually inching up over the past few days and weeks," Joshi observes, describing this as "a very inherent sign that the pressure for the market probably continues."

The analyst points to global geopolitical tensions and weak market sentiment as primary factors weighing on equity performance. While the Nifty faces pressure from heavyweights like Reliance Industries, the Bank Nifty's relative resilience creates a notable divergence in index performance.

Mixed Corporate Earnings Paint Varied Sector Picture

Recent quarterly earnings results present a heterogeneous landscape across different sectors and companies. The performance variations highlight the importance of company-specific analysis in the current market environment.

Havells India's disappointing performance stems from uneven demand in the consumer durables segment. Management commentary reveals multiple headwinds including modest overall demand, specific pressure in cooling products and small appliances, and the impact of rising input costs for materials like copper and aluminium. While companies retain some ability to pass through cost increases, higher prices risk dampening consumer demand further.

Strategic Stock Recommendations Amid Market Uncertainty

In the current environment, Joshi advocates avoiding broad market calls and instead focusing on sector-specific opportunities and individual stock selection. This approach acknowledges the divergent performance patterns across different market segments.

UPL has been added to Marketsmith's momentum portfolio based on several positive factors:

• Stable demand expectations
• Benign input cost environment
• Improving operating margins
• Expected earnings growth acceleration in coming quarters

For the pharmaceutical sector, Joshi recommends caution despite market excitement around potential large acquisitions. The focus should remain on organic growth drivers and new molecule launches rather than speculative merger and acquisition activity.

Aviation Sector Maintains Operational Strength

InterGlobe Aviation continues to demonstrate strong industry dominance with several supportive factors. Lower-than-expected regulatory penalties and stable fuel costs provide near-term operational comfort, though regulatory risks remain a consideration for future performance.

Market Outlook and Investment Strategy

The combination of rising distribution days, mixed earnings performance, and global uncertainties suggests continued market pressure in the near term. Joshi's analysis emphasizes the importance of selective stock picking over broad market exposure, focusing on companies with strong fundamentals and clear growth catalysts rather than attempting to time overall market movements.