The benchmark equity indices Sensex and Nifty extended losses on Tuesday as investors booked profits in select blue-chip stocks and foreign fund outflows weighed on sentiment.
The Sensex settled 376.27 points or 0.44 percent lower at 85,063.34, while the broader Nifty slipped to 26,175.60, down 74.70 points or 0.28 percent.
Trent, Reliance Industries and Tata Motors Passenger Vehicles were among the major laggards in the Nifty50 pack, declining up to 8 percent, while Hindalco Industries and Apollo Hospitals Enterprise were among the top gainers, rising up to 4 percent. Market breadth was negative as about 1561 shares advanced, 1774 shares declined and 182 shares unchanged.
The Nifty had hit a record high in intraday trade on Monday before reversing gains to settle 0.3 percent lower, dragged by losses in information technology stocks.
1) Profit booking in heavyweight stocks: HDFC Bank, the largest stock on the benchmark indices, fell about 2 percent. The stock has declined over 4 percent in the past two sessions amid profit booking following the lender’s provisional business updates for the third quarter of FY26.
India's top private sector lender posted 11.9 percent year-on-year (YoY) loan growth for the quarter ended December, while deposits increased 11.5 percent. Analysts at Nomura said slower deposit growth limited the increase in lending this quarter as the credit-deposit (CD) ratio, which measures loans given as a percentage of deposits, hit nearly 100 percent. The report added that the bank needs strong deposit inflows to accelerate loan growth going forward.
2) Tariff concerns: Trade-related worries resurfaced after US President Donald Trump said tariffs on India could be raised if New Delhi did not meet Washington’s demand to curb purchases of Russian oil. "They do trade, and we can raise tariffs on them very quickly," Trump has said.
3) Foreign fund outflows: Foreign institutional investors (FIIs) sold equities worth Rs 36.25 crore on Monday after a brief pause. FII selling puts pressure on domestic markets as it reduces liquidity and dampens investor confidence.
4) Geopolitical tensions: Market sentiment was also impacted by rising geopolitical tensions following the arrest of Venezuelan President Nicolas Maduro.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said heightened uncertainty called for caution. "Heightened uncertainty triggered by unprecedented geopolitical events demands a cautious approach to investment supported by higher cash position to exploit sudden movements in the market," he said.
5) Rise in volatility: India VIX, the volatility index, rose over 2 percent, extending its gains for the third straight session. The index has risen more than 10 percent in three days, indicating increased market nervousness and expectation of sharper price swings.
Aakash Shah, Technical Research Analyst at Choice Equity Broking Pvt , said the Nifty remained in a consolidation phase.
"From a technical standpoint, the Nifty 50 continues to trade within a broader consolidation zone but with a positive bias. Immediate support is seen around 26,100–26,150, while resistance is placed near 26,400–26,450. A decisive breakout above this resistance band could pave the way for an upside move towards 26,500 and higher, whereas inability to sustain above higher levels may once again lead to range-bound trade. Traders are advised to trail positions and avoid chasing sharp opening moves," Shah said.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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