Sensex declines 300 pts from day's high, Nifty below 25,000: Three key reasons behind market paring gains

Sensex, Nifty see profit-booking in September 10 trade. 

The equity benchmark indices pared early gains on Wednesday as profit-booking at higher levels dragged markets lower.

Sensex, which had surged nearly 500 points in morning trade, retreated nearly 300 points from the day’s high to 81,339.35. The broader Nifty slipped below the key 25,000 mark to 24,952.75.

At 2:40 pm, the Sensex was up 242.37 points or 0.3 percent to 81,343.69 and the Nifty was up 84.15 points or 0.34 percent at 24,952.75. About 2195 shares advanced, 1517 shares declined, and 108 shares unchanged.

Three key factors behind the market reversal:

1) Fall in auto stocks: The Nifty Auto index declined for a second straight session after a four-day rally. Investors booked profits following recent gains triggered by automakers’ price cuts in response to the GST Council’s decision to reduce levies on several vehicles.

2) Tariff concerns: Sentiment was hit after reports that U.S. President Donald Trump had urged European Union officials to impose tariffs of up to 100 percent on Chinese goods. Trump also encouraged the EU to extend similar tariffs to India, according to a Reuters report citing U.S. and EU officials.

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3) Profit-booking: Broad-based profit-taking was seen as investors locked in gains after intraday highs, leading to pressure on frontline indices.

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