Indian benchmark indices, Nifty and Sensex, managed to reverse morning losses by midday on Monday, as gains in auto and metal sectors provided much-needed support. However, IT and energy stocks weighed on the overall sentiment, reflecting ongoing investor concerns over weak Q2 earnings, relentless foreign outflows, and premium valuations.

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By 1 pm, the Sensex had pared most losses but was still down 169 points (0.22 per cent) at 77,411.10, while the Nifty slipped 44 points (0.19 per cent) to 23,488.50. The market breadth was negative, with 1,537 stocks advancing, 1,935 declining, and 110 remaining unchanged.

India VIX surged 4 per cent, nearing the 16-mark, signalling increased market volatility as investors remain cautious amid global headwinds.

The Nifty IT index was the worst performer, sliding over 2 per cent. The downturn followed Federal Reserve Chair Jerome Powell's hawkish comments, suggesting no immediate plans to cut interest rates due to sustained economic growth and persistent inflation.

On the positive side, Nifty Metal climbed 3 per cent, buoyed by China's decision to adjust export tax rebates on select aluminium and copper products. Auto stocks, particularly Hero MotoCorp, gained traction, supported by optimistic guidance and bullish brokerage calls.

Broader market trends

While the midcap index showed slight gains, the smallcap index remained under pressure. Despite recent challenges, both indices have outperformed, with a year-to-date gain of 17 per cent, significantly outstripping Nifty's eight per cent rise.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the lack of strong recovery signs in the market despite a 10 per cent correction in the Nifty from its peak. “Relentless FII selling, earnings downgrades, and concerns over elevated valuations are dampening sentiment. Investors should exercise caution and look at defensive plays in digital and quality banking stocks," he advised.

Anand James of Geojit suggested a potential resistance zone around 23,733-23,788 for the Nifty, with a possible upside towards 24,111. However, a break below 22,800 could indicate further weakness.

Stock movers

- Top Nifty Gainers: Hero MotoCorp, Hindalco, Tata Steel.
- Top Nifty Losers: Wipro, Infosys, TCS.
- Top Sensex Gainers: Tata Steel, M&M, Maruti Suzuki.

Notable stock actions

FirstCry: Shares surged nearly 8 per cent after the company reported a narrowing of losses in Q2 to Rs 63 crore, compared to Rs 119 crore last year, driven by a 26 per cent increase in revenue.

Honasa Consumer (Mamaearth): Shares hit a 20 per cent lower circuit following its first quarterly loss in five quarters for the September period.

City Gas Distribution Companies: Stocks like IGL, MGL, and Adani Total Gas tumbled after the government cut APM gas allocations for a second consecutive month, impacting profitability.