Sensex settles 500 pts lower, Nifty ends below 25,900: Persistent FII selling among key factors behind market decline

Stock market today: Sensex, Nifty see profit booking in trade. 

The benchmark equity indices Sensex and Nifty extended decline on Tuesday, weighed down by persistent foreign fund outflows, a weak rupee and subdued trends in global markets.

The Sensex tanked 533.50 points or 0.63 percent to settle at 84,679.86. During the day, it dived 592.75 points or 0.69 percent to 84,620.61. The Nifty dropped 167.20 points or 0.64 percent to 25,860.10.

In the Nifty50 pack, Axis Bank, Eternal and JSW Steel were among the major laggards, declining up to 4 percent. Nestle India and Bharti Airtel were among the gainers, rising up to 1 percent. Market breadth remained negative, with 1,459 shares advancing, 1,672 declining and 161 remaining unchanged.

Factors behind market decline

2) Persistent FII outflows: Foreign institutional investors sold shares worth Rs 1,468.32 crore on Monday, marking the 12th consecutive session of net selling. Continuous FII outflows put pressure on equity markets as they reduce liquidity and weigh on overall investor confidence.

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3) Weak global cues: Global market sentiment remained subdued. Wall Street futures were down by up to 1 percent around 9:30 am IST, pointing to a weak start for US markets. US equities had closed lower on Monday.

In Asia, markets such as South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng were trading in the red.

"Major equity indices on Wall Street closed lower amid a risk-off sentiment ahead of key economic data releases, including non-farm payrolls, retail sales, and inflation figures, which could influence the future course of monetary policy. Asian markets also opened lower, with cautious traders paring positions ahead of the Bank of Japan's crucial monetary policy decision later this week," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, told PTI.

On the domestic front, persistent FII outflows and continued pressure on the rupee near record lows remain key near-term headwinds, he said.

4) Jitters ahead of US jobs data: Investors remained cautious ahead of the release of US jobs data by the Bureau of Labor Statistics for November later in the day. The data is closely watched for cues on interest rate outlook in the US, which can influence global capital flows, including into emerging markets like India.

5) Weekly expiry: Tuesday is also the weekly expiry day for Nifty derivatives, which typically leads to higher volatility due to position adjustments by traders.

Technical view

Anand James, Chief Market Strategist at Geojit Investments, said, “As yesterday, we will persist with expectations of continuation of uptrend. However, being at the upper extreme of the declining parallel trendline, a turn lower is an equally likely event, prompting us to have a watchful eye on 25,900. Expect consolidation early in the day, in the 26,000–25,970 vicinity, followed by attempts to push higher.”