Record peaks, cautious close: Sensex, Nifty slip as profit-taking caps rally

CHENNAI: Indian benchmark indices closed marginally lower on Monday (December 1) after a volatile session that saw both the Sensex and Nifty 50 scale fresh all-time highs in early trade before reversing course as investors booked profits at record levels. The Sensex ended at 85,641.90, down 64.8 points, while the Nifty 50 settled at 26,175.75, lower by 27.2 points. The broader market showed mixed momentum, with small-cap stocks slightly outperforming mid-caps, reflecting selective risk appetite beyond the headline indices. The session began on a strong note as optimism surged following robust economic data indicating an 8.2 percent expansion in India’s second-quarter GDP, the fastest pace in 18 months. The reading, which exceeded market expectations, initially boosted sentiment in cyclically aligned segments including automobiles, cement, and select industrial names, as traders bet on sustained domestic demand and improving business conditions. The banking index too touched the 60,000 milestone intraday, signalling confidence in financial heavyweight participation during the morning rally. However, the early euphoria eased as indices approached new peaks, triggering cautious positioning. Profit-taking accelerated in large-cap financials and pharmaceuticals, creating a drag that tilted the key benchmarks into the red by closing. Market observers also pointed to fading expectations of an imminent interest-rate cut by the Reserve Bank of India, given the resilience in growth and persistent inflationary considerations, which tempered risk-on behaviour among institutional investors. By the end of the day, the mood on Dalal Street reflected a measured stance. While the economy continues to show structural strength, valuations near record highs appear to be prompting disciplined allocation rather than directional aggression. Analysts broadly interpreted the muted close not as a sign of market weakness but as a healthy cooling-off phase amid strong fundamentals. The mixed performance in the broader market indicates that investors are discerning opportunities selectively rather than buying into strength across the board. Going forward, participants are likely to track RBI policy signals, currency stability, crude oil price trends, and the trajectory of third-quarter corporate earnings for cues on whether the current growth momentum translates into margin and profit expansion. The consensus among strategists suggests that short-term volatility may persist, and investors would be better served by focusing on sector and stock-specific themes that align with domestic demand and operational resilience rather than chasing index-level highs. Overall, Monday’s close encapsulated a session of optimism tempered by prudence, underlining a market that remains confident about India’s macroeconomic story, yet mindful of valuation sensitivities and policy uncertainties.