Indian shares closed lower in a ceremonial session held to mark Diwali, the Hindu festival of lights, marking the first such decline since 2017. The NSE Nifty 50 Index fell 0.2%, reversing an earlier gain of as much as 0.4%, in the hour-long session on Sunday. Lenders including HDFC Bank Ltd., ICICI Bank Ltd., and Axis Bank Ltd. weighed on the gauge. The decline halts a rally in which the index had gained for seven straight sessions. It also breaks from historical trends, as indexes had advanced in eight out of the past 10 Diwali-day sessions, known as Muhurat trading.
Determined by the new moon, the truncated session is considered the most auspicious time on the Hindu calendar to start investments and to put aside losses from the past year. Markets will be shut Tuesday for Diwali. The benchmark index is down more than 4% so far this year, putting it on course for its first annual decline in 11 years.
Still, there are signs sentiment is turning. Fears around the artificial intelligence trade that dented stocks in the US and South Korea are seen bringing focus back to India. The Nifty 50 rose more than 8% last week, the most since February 2021. "After two years of stagnation, the market has the potential to give investors bumper returns by next Diwali, because of confluence of low valuation and high earnings growth," said Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services.
Foreign investors have also turned buyers of local shares in recent days, with net purchases of $3.6 billion so far in November, trimming withdrawals this year to $26.8 billion. The BSE Sensex ended little changed on Sunday, while small- and mid-cap stocks outperformed large-caps, with the Nifty Smallcap 250 index rising 1.2%.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing