Sensex declines 400 pts, Nifty below 25,350: Profit booking among key factors behind market fall

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26 Aug, 2025 12:21

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The equity benchmark indices declined on Friday after a three-day rally, with investors booking profits in select heavyweights, however, the domestic markets notched a third consecutive weekly gain - their longest winning streak in five months after gaining over 1 percent on a weekly basis.

Sensex tanked 387.73 points or 0.47 percent to settle at 82,626.23. During the day, it dropped 528.04 points or 0.63 percent to 82,485.92. The Nifty declined 96.55 points or 0.38 percent to 25,327.05.

Tata Consultancy Services, Titan, ICICI Bank, Power Grid, Mahindra & Mahindra and HCL Tech were among the major laggards.

1) Profit-booking: Profit-taking was seen in bluechips including TCS and ICICI Bank. Heavy selling pressure emerged in the Nifty IT index, as well as FMCG and banking counters.

2) Trump administration withdraws sanctions waiver to Chabahar port: Investor sentiment was impacted by the U.S. administration’s decision to withdraw the sanctions waiver granted to the Chabahar port in Iran, being developed by India. The waiver, first introduced in 2018, will end on September 29. "Investor sentiment has also been dampened by the revocation of sanctions relief by the U.S. for India at Iran's Chabahar port," said Devarsh Vakil, Head of Prime Research at HDFC Securities.

3) Weak global cues: Global equities were also subdued. Japan's Nikkei 225 index, South Korea's Kospi and Shanghai's SSE Composite index were trading lower, while Wall Street futures remained flat, offering little support to sentiment.

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4) Rise in volatility index:  The India VIX — the volatility index considered the market’s fear gauge — rose 3.36 percent to 10.22. A rise in VIX typically signals heightened caution among traders, which can weigh on equity markets.

5) Rupee declines: The rupee witnessed range-bound trading in morning deals on Friday and depreciated 7 paise to 88.27 against the US dollar, dragged lower by broad dollar strength and a negative trend in domestic equities. Forex traders said the recovery in the US dollar capped the upside for the domestic unit. Moreover, worries over US tariffs on India dented investor sentiments further.

Technical Analysis

Anand James, Chief Market Strategist at Geojit Financial Services, said: "Having entered the 25,400-25,600 region which has been in our radar as an upside objective for some time now, and with it, a test of the upper Bollinger Band, sluggishness has re-emerged. However, a direct rise above 25,440 could encourage us to stay with the uptrend till at least 25,600. Alternatively, slippage past 25,292/280 could trigger falls, though momentum indicators do not suggest a collapse."

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.