Sensex drops 300 pts from day's high, Nifty below 25,700: 3 key reasons behind market fall

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

• Sensex and Nifty erased early gains amid volatile trading.
• FII selling and weak global cues weighed on market sentiment.
• Nifty expiry day led to sharp intra-day swings and volatility.

Did our AI summary help?

The equity benchmarks pared early gains in volatile trade on Tuesday, with the Sensex slipping over 100 points from the day’s high and the broader Nifty hovering below the 25,750 level on weekly expiry day.

The Sensex had earlier climbed 246.07 points or 0.29 percent to touch an intra-day high of 83,523.22. The Nifty also rose above the 25,700 mark to 25,730.35 in early trade.

However, the benchmarks later gave up most of the gains amid volatile movements. At around 2:15 pm, the BSE barometer was quoting at 83,315.80, up 28.57 points or 0.034 percent. The Nifty traded at 25,671.60, down 11.15 points or 0.043 percent.

Key factors behind market pullback

1) FII selling: Foreign institutional investors (FIIs) offloaded equities worth Rs 972.13 crore on Monday. Sustained selling by overseas investors typically weighs on domestic equities as it leads to outflows and impacts overall market sentiment.

2) Weak global cues: Asian markets were largely weak. Japan’s Nikkei 225 index traded nearly 1 percent lower. US futures were down, while oil prices were mixed. Gold and silver prices also declined. Weak economic data released on Monday dampened sentiment in Tokyo. Shares of SoftBank Group fell 6.2 percent, dragging indices lower. The Nikkei 225 was down 1 percent at 56,237.65 by midday. European markets had ended on a mixed note on Monday.

Stock Market Live Updates

3) Nifty weekly expiry: Tuesday marks the weekly expiry of Nifty derivatives contracts. Such sessions typically witness heightened volatility due to rollovers and position adjustments by traders, leading to sharp intra-day swings.

4) Metal stocks under pressure: Shares of metal firms dropped, pushing the Nifty Metal index down around 2 percent. Hindustan Copper shares were the top loser on the index, falling more than 4 percent to trade at Rs 551.25 apiece. This came as copper prices plunged, with red metal’s futures with February expiry falling around 2 percent on MCX.

Technical view

Anand James, Chief Market Strategist at Geojit Investments Limited, said buyers may appear hesitant early in the day following Monday’s sharp rise into the 25,690–25,750 zone.

He said the bullish engulfing candlestick formation keeps hopes of further upside intact and advised waiting for dips to the 25,620–25,570 range. On the upside, the 25,750 region is likely to act as a hurdle, while 25,900 appears achievable, he added.

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.