Sensex settles 250 pts lower, Nifty ends near 25,900: Weak global cues among key factors behind markets snapping 6-day gains

1) Weak global cues: Across Asian markets, South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng were trading sharply lower. US markets also ended in the red on Monday ahead of key economic data due this week, including the delayed September jobs report.

2) Profit-taking: Profit booking was visible across sectors, with all NSE indices trading in the red.

Prashanth Tapse, Senior Vice-President (Research) at Mehta Equities, said the broader market undertone remains constructive, supported by political stability, easing inflation, soft crude oil prices and optimism around trade negotiations. “However, lacklustre global sentiment is a mild drag,” he added.

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3) Heavy selling in IT, Metal shares: Metal and IT shares saw notable declines. Nifty IT shed nearly 1 percent, with Mphasis, Coforge and Tech Mahindra among the major losers as the market participants trimmed expectations of a US Federal Reserve rate cut in December, with the probability falling to 42.9 percent from 62.4 percent last week, according to the CME FedWatch tool. Higher US rates typically reduce the appeal of emerging-market assets such as India’s.

The Nifty Metal index was down 1.5 percent, tracking a firm dollar.

4) Expiry day move: Tuesday’s session also coincided with the weekly derivatives expiry, adding to volatility. "Tuesday may bring pockets of volatility due to weekly F&O expiry and soft global cues," Tapse said, while reiterating that the overall tone remains constructive.

5) Weak rupee: The rupee opened weaker, slipping 8 paise to 88.67 against the US dollar amid selling pressure in equities and global trade-related uncertainty. Traders were tracking developments on the proposed India-US trade deal and awaiting domestic PMI data due later this week.

On the technical front, Anand James, Chief Market Strategist at Geojit Financial Services, said Nifty continues to struggle for clear direction. "With both 26,130 and 25,840 intact, a sideways bias is likely. We expect initial slippages to 25,980 or 25,900, followed by an upswing attempt. A direct rise above 26,022 could open the way to 26,130," he said.

(Inputs from Reuters) 

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