Sensex falls 400 pts from day's high, Nifty settles below 24,800: 3 reasons behind market decline

Sensex, Nifty see profit-booking in September 8 trade. 

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The equity benchmark indices settled higher for the fourth straight session with modest gains on Monday after giving up most of the early gains due to profit-booking in IT and FMCG shares and continued selling by foreign investors.

Sensex rose 76.54 points or 0.09 percent to settle at 80,787.30. During the day, it jumped 460.62 points or 0.57 percent to a high of 81,171.38 led by gains in auto, oil and private bank shares.

The NSE Nifty ended 32.15 points or 0.13 percent higher at 24,773.15 after touching an intraday high above 24,800.

Fag-end selling trimmed early gains, with IT and FMCG stocks among the biggest drags. The Nifty IT index fell 1.6 per cent from the day’s high. On the other hand, the broader market showed resilience as the Nifty Midcap and Smallcap indices closed modestly higher.

Trent declined 3.81 percent. Asian Paints, HCL Tech, Tech Mahindra, L&T, TCS, Power Grid and Sun Pharma were also among the laggards.

Key factors behind the market decline

1) Profit-taking in IT stocks: The Nifty IT index closed nearly 1 percent lower after US trade adviser Peter Navarro reposted a message on social media calling for tariffs on foreign remote workers, raising concerns over Indian IT exports.

Vinod Nair, Head of Research, Geojit Financial Services, said, "The domestic market failed to sustain early gains as late-session sell-off reflected the prevailing buy-on-dips, sell-on-rallies strategy. Auto and ancillary stocks continued to rally on demand recovery hopes after GST rate cuts, while IT remained weak amid global uncertainties."

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2) FII selling: Foreign Institutional Investors offloaded equities worth Rs 1,304.91 crore on Friday, continuing the recent selling trend that weighed on market sentiment.

3) Rising crude oil prices: Global oil benchmark Brent crude advanced 1.88 percent to USD 66.73 a barrel. Higher crude prices typically impact India’s import bill and inflation outlook, adding to investor caution.

Outlook

Ajit Mishra, SVP, Research, Religare Broking Ltd, said, "The prevailing tussle in the market will likely end only with a decisive breakout above 25,000 on the Nifty. On the downside, the 24,400–24,600 zone should act as support. Traders should closely track banking and IT majors for directional cues, while focusing on other sectors showing strength on a rotational basis."

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.