Why did Dalal Street end in the red? Three takeaways from Thursday's trade

The equity benchmark indices BSE Sensex and NSE Nifty ended lower on Thursday (June 11) after a volatile trading session, with the Nifty closing below 23,200 as weakness in information technology, defence and broader market stocks outweighed gains in banking shares.

The Sensex fell 151 points to 73,833, while the Nifty declined 53 points to settle at 23,162.

IT and Defence Stocks Lead Declines

One of the biggest drags on the benchmark indices was the IT sector. The Nifty IT index extended its losing streak to seven straight sessions, with all constituent stocks ending in the red. Infosys was among the major contributors to the Nifty's decline.

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Defence shares also came under pressure, making the Nifty Defence index the worst-performing sectoral gauge of the day. Infosys Ltd dropped more than 11% after a key global client faced a major setback in the United States. Losses in Trent Ltd, PPAP Automotive, Kotak Mahindra Bank Ltd and Infosys Ltd further weighed down the Nifty.

Broader Markets Underperform

Broader markets saw sharper declines than the benchmark indices. The Nifty Midcap index fell 485 points to 59,325, indicating widespread selling across mid-sized companies. Market breadth remained weak, with the NSE advance-decline ratio at 1:3, showing that declining stocks significantly outnumbered advancing ones.

Among the top midcap losers were Trent Ltd, PPAP Automotive, Paytm, Kotak Mahindra Bank Ltd and Infosys Ltd.

Banks Buck Trend, Select Stocks Rally

Banking shares provided support to the market and helped limit losses in the benchmark indices. The Nifty Bank index rose 76 points to 55,177, outperforming the broader market and ending the session in positive territory.

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On the stock-specific front, Trent Ltd gained more than 9% after its board approved a ₹2,300 crore fund raise. The company was also in focus as the FIFA World Cup begins on Thursday. PPAP Automotive surged 19% after announcing a partnership with French firm Hutchinson.

Despite gains in select stocks and strength in banking shares, losses across IT, defence and broader market segments kept the Sensex and Nifty in negative territory at the close.

From the Sensex basket, ICICI Bank Ltd, Kotak Mahindra Bank Ltd, JSW Steel Ltd, Dr Reddy's Laboratories Ltd, Oil and Natural Gas Corporation Ltd and Bharti Airtel Ltd were the major gainers.

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Infosys Ltd, Adani Ports & Special Economic Zone Ltd, HCL Technologies Ltd, Eternal Ltd, Trent Ltd and Bharat Electronics Ltd were the biggest laggards.

Sunil Koul, Global Emerging Market Equity Strategist, Goldman Sachs, on markets, said, "I think Indian market valuations are still a little bit expensive relative to the rest of the world, with markets still trading at 20 times.

But if you look at what the markets have been rewarding this year, it is the delivery of earnings, right? So we have seen the North Asian markets, Korea and Taiwan, do extremely well this year, and obviously, they are in the right pockets of the AI trade, but the fact also remains that earnings in those pockets have been growing very strongly.

Just to give you a couple of stats there, for Korea in particular, we are expecting around 320% earnings growth this year. Even if you strip out the two top semiconductor names, the rest of the market is still printing close to 50% earnings growth.

The same in Taiwan, where not just this year but next year we are expecting around 30% earnings growth. So relative to that scheme of things, India is still looking at, as I said, high single-digit, maybe at best double-digit earnings growth, with the market trading at 20 times forward valuations."