Indian stock markets ended lower on Tuesday, August 4, snapping a four-session winning streak as investors turned cautious amid heightened volatility linked to the new closing auction mechanism for futures and options (F&O) stocks. The Nifty 50 fell 159 points to close at 24,615, slipping below the 24,650 mark, while the BSE Sensex declined 210 points to 78,429.
The trading session was unusually volatile, with the Nifty swinging sharply during the final part of the day. The new closing auction session, introduced for F&O stocks, added to uncertainty as traders adjusted to a different method of determining closing prices. The weekly derivatives expiry further amplified the moves.
The Nifty had fallen below 24,450 during the afternoon before recovering sharply during the closing auction. It climbed from around 24,463 before the auction to briefly touch 24,650. However, the benchmark ultimately settled at 24,615. The Sensex also remained under pressure for much of the session before ending 210 points lower.
Tuesday marked the second trading session under the new closing-price framework for F&O stocks. Under the revised system, regular cash-market trading in these stocks ends at 3:15 pm. Investors then have roughly 15 minutes to place orders for the closing auction, with the exchange determining an equilibrium price based on available buy and sell orders.
F&O trading itself continues until 3:40 pm, giving derivatives traders additional time to respond to the official closing price. The new system is designed to improve price discovery and reduce the impact of large last-minute orders, but its early implementation has resulted in sharp divergences between prices seen before and after the auction.
Market experts described Tuesday’s volatility as an initial adjustment to the new mechanism rather than a sign of a fundamental deterioration in the Indian economy.
Despite the broader weakness, select stocks attracted buying interest. Hindalco Industries, Trent, Apollo Hospitals, Jio Financial Services and Eternal were among the notable Nifty gainers, showing that investors continued to pick stocks selectively even as the benchmark remained under pressure.
Metal stocks were among the stronger pockets of the market. Hindalco benefited from buying interest, while select consumer and financial stocks also managed to stay in positive territory. The Nifty’s sectoral picture, however, remained largely weak, with most sectors ending in the red.
The resilience in some individual stocks came against the backdrop of strong corporate earnings and continued expectations that domestic economic growth will support equities over the longer term.
On the other side, Grasim Industries, HDFC Life, Max Healthcare, Hindustan Unilever and Nestle India were among the top Nifty losers. Selling pressure was particularly visible across information technology, realty, infrastructure, consumer and several financial stocks.
The Nifty Realty and IT sectors were among the weaker performers during the session, while banking, FMCG, pharma and healthcare stocks also faced pressure. Metal stocks stood out as one of the few areas showing relative strength.
LIC remained under pressure after the government launched an offer for sale at a discount to the prevailing market price. The stock fell sharply during early trade as investors assessed the impact of the government’s stake sale on supply and valuation.
Dabur shares also declined after the Food Safety and Standards Authority of India (FSSAI) barred the company from selling certain products carrying 100% claims, adding another stock-specific pressure point to an already cautious market.
Meanwhile, several companies reported their June-quarter results. Bharti Airtel reported a quarterly profit of ₹8,167 crore, up 11.5% sequentially, while revenue rose 6% to ₹58,539 crore. Nykaa reported a 248% year-on-year jump in profit to ₹80 crore, with revenue rising 29% to ₹2,782 crore.
KEI Industries also gained after reporting a 40% rise in Q1 FY27 profit and a 23% increase in revenue. GE Shipping was another notable stock, rallying after reporting a 160% year-on-year increase in quarterly net profit and a 67% rise in revenue.
The market’s attention now shifts towards the Reserve Bank of India’s monetary policy decision, along with global cues, crude oil prices and upcoming US economic data.
Earlier in the week, optimism over possible US-Iran talks had helped drive a strong rally in Indian equities. On Monday, the Nifty had jumped 1.6% and the Sensex gained 0.7%, helped by falling oil prices and improved geopolitical sentiment.
Despite Tuesday’s fall, market strategists continue to see the broader economic backdrop as supportive. Geojit’s VK Vijayakumar noted that strong credit growth, healthy auto numbers, improving GST collections and renewed foreign investor buying were positive signals for the market.