Nifty Gives Up Early Gains; Thermax Slumps 14%

Indian equity benchmarks surrendered their early gains on Friday, with the Nifty slipping into the red by mid-session despite a positive start. The 50-stock index, which had opened firm, gave up all its gains as selling pressure emerged in select heavyweight names. The Sensex too pared its initial advance, trading flat with a negative bias.

Market participants pointed to profit booking in recently outperforming counters, with capital goods major Thermax bearing the brunt. The stock crashed 14% in intraday trade, emerging as the top loser on the Nifty. While no immediate company-specific trigger was cited, traders attributed the sharp fall to profit-taking after a strong run-up in the stock over the past few months.

Thermax leads the decline

Thermax's steep slide dragged the capital goods index lower, and the stock's heavy weightage in the Nifty contributed to the benchmark's weak tone. The stock had rallied significantly in the preceding sessions, and Friday's fall appeared to be a sharp correction, though analysts refrained from calling it a trend reversal.

Other losers included index heavyweights from the financial and IT spaces, which saw mild profit booking. However, the broader market showed resilience, with midcap and smallcap indices trading mixed.

Broader market holds up

Despite the Nifty's weakness, breadth on the National Stock Exchange remained slightly positive, with more stocks advancing than declining in the early afternoon session. Defensive sectors such as FMCG and pharma traded firm, cushioning the downside.

Auto stocks too showed some strength, led by two-wheeler makers, while metal and energy counters remained subdued. Investors appeared to be taking a cautious stance ahead of global cues, including the US Federal Reserve's policy meeting scheduled next week.

Volatility expected to persist

Derivatives data indicated elevated volatility, with the India VIX hovering near recent highs. Traders are bracing for sharp swings as the monthly futures and options expiry approaches, and the Nifty's immediate support is seen around the 24,500 level, according to technical analysts.

Foreign institutional investors have been net sellers in the cash market over the past few sessions, while domestic institutions have provided support. The rupee remained stable against the dollar, offering little direction to the market.

In the near term, market watchers say the focus will be on corporate earnings, with several midcap companies reporting results later in the day. Global oil prices, which have been range-bound, also bear watching for their impact on inflation and rate expectations.

With the Nifty giving up early gains, the session is likely to remain choppy. Traders are advised to keep a close eye on the 24,500-24,600 band for the index, and any breakout or breakdown could set the tone for the next few sessions.