The equity benchmark indices declined on Tuesday, tracking weak global cues and persistent foreign fund outflows.
The Sensex dropped 519.34 points, or 0.62 percent to settle at 83,459.15. During the day, it tanked 565.72 points, or 0.67 percent, to 83,412.77. The Nifty declined 165.70 points or 0.64 percent to 25,597.65.
Titan, Bharti Airtel and HDFC Life Insurance Company were among the top gainers in the Nifty50 pack, rising up to 2 percent, while the Power Grid Corporation of India and Tata Consumer Products were the major laggards, declining up to 3 percent.
Key factors behind market decline today
1) Persistent FII selling: Foreign Institutional Investors (FIIs) continued their selling spree, offloading equities worth Rs 1,883.78 crore on Monday — the fourth straight session of outflows since October 29.
2) Weak global cues: In Asian markets, South Korea’s Kospi, Japan’s Nikkei 225 and China’s Shanghai Composite Index were trading lower as investors booked profits following strong tech-led rallies over recent weeks. US futures also dropped up to 1.1 percent amid profit booking, signaling a weak start for Wall Street later in the day.
"FIIs’ renewed selling is constraining the rally in the market. During the last four days, FIIs have sold equities worth Rs 14,269 crore. This indicates they are likely to continue selling on rallies," said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
He added that higher valuations in India and muted earnings growth are prompting FIIs to focus on relatively cheaper markets with better earnings potential.
3) Modest quarter earnings: On the earnings front, market sentiment also remained subdued amid modest Q2 results. "Earnings growth from the banking sector has been steady, while the IT sector has reported weak numbers. This will keep overall earnings growth muted in FY26. However, an improvement of around 15 percent is likely in FY27, which the market may begin to price in soon," Vijayakumar said.
4) Profit booking: Investors booked profits in metal, auto and banking shares following a recent sharp rally. "Markets are seeing some profit-booking after the recent rally triggered by tax cuts and an improving earnings outlook," Sandip Raichura, Executive Director and CEO of Retail and Distribution at Prabhudas Lilladher told Reuters. "The construct for domestic equities remains positive, but markets await stronger earnings in the December quarter and clarity on global trade developments before scaling new highs," he added.
5) IT shares see selling: Sentiment was weighed by weakness in U.S. economic data, while a divergence in views from Federal Reserve officials clouded the outlook for a December interest rate cut. Heavyweights TCS and Infosys were down up to 1 percent.
6) Expiry day move: Traders also pointed to volatility ahead of Nifty’s weekly derivatives expiry, which often leads to sharp intraday movements as traders roll over or square off their positions.
Technical analysis
"While yesterday’s upswing was on expected lines, we do not see momentum picking up unless 25,927 is cleared. The index is likely to move sideways as long as it stays below 25,815. A fall below 25,650 could bring 25,400 back into focus," said Anand James, Chief Market Strategist, Geojit Financial Services.
With inputs from Reuters
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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