Sensex settles 950 pts lower, Nifty ends below 25,200: Weak global cues among key factors behind market crash

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

• Sensex and Nifty fell tracking weak global cues and FII outflows.
• IT stocks gained while most other sectors traded in the red.
• Rupee fell to 90.95 against US dollar amid market weakness.

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The equity benchmark indices Sensex and Nifty settled over 1 percent lower on Friday, tracking weak global cues and fresh foreign fund outflows.

The Sensex tanked 961.42 points or 1.17 percent to settle at 81,287.19. During the day, it dropped 1,089.46 points or 1.32 percent to 81,159.15. The Nifty tumbled 317.90 points or 1.25 percent to end at 25,178.65.

Among the Nifty constituents, UltraTech Cement, Shriram Finance and Max Healthcare Institute were among the major laggards, falling up to 2 percent. On the other hand, ETERNAL and Infosys gained up to 2 percent.

Barring IT, all other 15 major sectoral indices were trading in the red. The broader Nifty Smallcap100 and Nifty Midcap100 indices were down up to 1 percent.

IT stocks, which have lost about 20 percent so far in February amid concerns over artificial intelligence-led disruption, rose 1.9 percent at the open.

Key factors behind market decline

1) Weak global cues: In Asia, South Korea’s Kospi, Japan’s Nikkei 225 and Shanghai’s SSE Composite index were quoting lower. In the US, markets ended mostly lower on Thursday. The S&P 500 and European equities finished in the red after chipmaker Nvidia reported quarterly earnings. Despite better-than-expected results and strong revenue guidance of USD 78 billion for the first quarter, Nvidia shares fell 5.5 percent, weighing on semiconductor stocks and overall sentiment. Tech-heavy Asian indices tracked losses in the Nasdaq.

2) FII selling: Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,465.99 crore on Thursday. Continuous selling by overseas investors exerts pressure on domestic equities as it leads to capital outflows and weakens overall market sentiment.

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3) India VIX rises: The India VIX, the volatility gauge, rose nearly 3 percent to 13.44. A rise in the index indicates higher market uncertainty and often leads to cautious trading by investors.

"There is cautious sentiment and persistent pressure from the bears," Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, told Reuters. "The prolonged sideways movement reflects the absence of momentum in either direction, reinforcing the ongoing consolidation phase."

4) Geopolitical concerns: Talks between the US and Iran over Tehran’s nuclear programme ended without a deal on Thursday, raising concerns over potential escalation in the Middle East.

"The recent US-Iran negotiations over Iran's nuclear programme concluded without a breakthrough, heightening concerns over the possibility of a US strike and the risk of a broader Middle East conflict.

"Amid rising uncertainty over the next US course of action regarding Iran, and in the absence of fresh domestic catalysts, investor participation is likely to remain cautious and selective," Ponmudi R, CEO of Enrich Money, told PTI.

5) Rupee declines: The rupee fell 4 paise to 90.95 against the US dollar on Friday, weighed down by FII outflows and weakness in domestic equities. However, a softer dollar and lower global crude oil prices capped the fall, forex traders said. At the interbank foreign exchange market, the rupee opened at 90.91 against the dollar and later slipped to 90.95, down 4 paise from its previous close.

Technical outlook

Anand James, Chief Market Strategist at Geojit Investments, said the repeated rejection at higher levels is disappointing, though the base has held so far, indicating a possible triangle formation.

"We will continue to look for a break of 25,670 to confirm strength, in order to aim for 25,900. Swings on either side of 25,530 may be expected, but we will wait for a fall below 25,300 to switch sides," he said.

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