At 14:30 IST, the barometer index, the S&P BSE Sensex, shed 172.42 points or 0.23% to 76,348.14. The Nifty 50 index lost 69.15 points or 0.30% to 23,136.20.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index dropped 1.51% and the S&P BSE Small-Cap index fell 1.89%.

The market breadth was weak. On the BSE, 1,045 shares rose and 2,830 shares fell. A total of 130 shares were unchanged.

Economy:

The HSBC Flash India Composite Output Index, which measures the month-on-month change in the combined output of India's manufacturing and service sectors, fell from a final reading of 59.2 in December to 57.9 in January. This indicated the weakest rate of expansion in 14 months. However, the headline figure remained well above its long-term average of 54.7.

While the slowdown at the composite level, driven by the service sector, was evident, there was a pickup in growth among goods producers. The HSBC Flash India Manufacturing PMI, a snapshot of factory business conditions based on new orders, output, employment, supplier delivery times, and stocks of purchases, rose from 56.4 in December to 58.0 in January, reflecting the best improvement in the sector's health since July 2024.

Pranjul Bhandari, Chief India Economist at HSBC, said: “India’s manufacturing sector started the year strong, with output and new orders bouncing back from a relatively weak third fiscal quarter. The rise in new export orders was especially noticeable, and the easing of input cost inflation is also good news for manufacturers. The cooling in growth in new domestic business in the services sector, however, highlights a potentially emerging weak spot in the economy. New export business for service providers, on the other hand, looks set to maintain its growing momentum.”

Buzzing Index:

The Nifty Pharma index dropped 2.14% to 21,865.30. The index rallied 2.13% in past two consecutive trading sessions.

Mankind Pharma (down 4.57%), Dr Reddys Laboratories (down 4.49%), Glenmark Pharmaceuticals (down 3.64%), Gland Pharma (down 3.42%), Ipca Laboratories (down 3.11%), Ajanta Pharma (down 2.96%), Natco Pharma (down 2.86%), Zydus Lifesciences (down 2.62%), Alkem Laboratories (down 2.4%) and Granules India (down 2.33%) declined.

Numbers to Track:

The yield on India's 10-year benchmark federal paper shed 0.19% to 6.832 as compared with the previous close of 6.845.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 86.2050, compared with its close of 85.4400 during the previous trading session.

MCX Gold futures for the 5 February 2025 settlement rose 0.47% to Rs 79,999.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.60% to 107.49.

The United States 10-year bond yield fell 0.15% to 4.630.

In the commodities market, Brent crude for March 2025 settlement lost 12 cents, or 0.15% to $78.17 a barrel.