Market takes a break as investors brace for next trading session

The stock markets took a brief pause today, 26 February, as the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) remained closed in observance of Mahashivratri.

With all trading segments — including equities, derivatives, currency, and interest rate derivatives — shut for the day, investors can take a moment to assess recent market movements. Commodity trading, however, will resume in the evening session from 5.00 to 11.55 pm, while regular trading will recommence on 27 February.

The pause comes on the back of a volatile session where benchmark indices struggled to sustain early gains. The Nifty 50 ended its sixth consecutive losing session, slipping six points to close at 22,547.55, while the Sensex managed a marginal gain of 147.71 points, settling at 74,602.12.

Sectoral performance has been mixed with IT, metals, oil and gas, and PSU banks recording losses of 0.5-1 per cent, while auto, FMCG, telecom, and consumer durables managed modest gains of 0.5 per cent. Among individual stocks, M&M, Bharti Airtel, Bajaj Finance, Maruti Suzuki, and Nestle saw gains, whereas Hindalco, Dr. Reddy’s Labs, Sun Pharma, Hero MotoCorp, and Trent ended lower.

Market analysts noted the sustained bearish sentiment, with the Nifty hovering below the 21-EMA on the hourly charts, signalling selling pressure on every rise. According to LKP Securities, support levels are seen at 22,500, with resistance placed at 22,650 and 22,750-22,800, making any recovery attempt vulnerable to further selling.

The Indian rupee faced sharp depreciation, declining by 50 paise to close at 87.20 against the US dollar. Rahul Kalantri, VP-commodities at Mehta Equities, attributed the weakness to global cues, including US President Donald Trump’s latest tariff-related remarks and sustained foreign portfolio investor (FPI) sell-offs in domestic equities. “We expect continued volatility, with the rupee trading between 86.65 and 87.70 in the near term,” he added.

Experts view the current market sentiment as a reflection of deep-rooted uncertainty, with retail investors and traders displaying caution. Traded volumes in both cash and derivatives segments have remained subdued as investors are hesitant to take fresh positions. Many market participants are holding on to hopes of a recovery, but prevailing conditions suggest that optimism may be misplaced.

One key factor influencing the market downturn is the continued pressure on leveraged traders. The rising cost of funds since October 2021 has hit buy-and-hold investors who have availed margin trading facilities. This double impact of rising interest costs and declining stock prices is leading to the unwinding of long positions, which could exacerbate selling pressure.

Interest rate-sensitive sectors such as banks, NBFCs, and companies reliant on EMI-based sales are particularly vulnerable. The financial sector holds the highest weightage in the Nifty 50 at 34.35 per cent, making it a crucial driver of market direction. Any significant movement in banking stocks has the potential to sway the broader indices.

Furthermore, the impact of previous sectoral rallies, particularly in PSUs, autos, infrastructure, and power, is now being tested as traders reassess exposure. Market-wide position limits (MWPL) suggest that exposure levels remain high in these sectors, indicating the risk of further selling if sentiment weakens.

Attempting to call a market bottom amid ongoing weakness can be a risky endeavour, suggests market expert Vijay Bhambani. “While short-covering rallies may provide temporary relief, a sustained recovery requires aggressive fresh buying. Currently, there is little evidence of retail investors stepping in to buy the dips, given the ongoing financing pressures in the leveraged segment,” he said in a programme on YouTube.

While the possibility of a short-term technical rebound remains, market experts warn that structural factors — such as rising borrowing costs, sectoral vulnerabilities, and foreign investor outflows — could continue to weigh on sentiments. As markets prepare to reopen post-holiday, investors will be closely watching global cues, FPI activity, and sectoral trends for further direction.