Sensex settles 300 pts lower, Nifty below 25,150: Weak global cues among key factors behind market decline

1) FII selling pressure: Foreign Institutional Investors (FIIs) turned net sellers again on Monday, offloading equities worth Rs 240.10 crore after four consecutive sessions of buying. Persistent selling by overseas investors weighed on domestic sentiment.

2) Expiry-linked volatility: Markets remained choppy on the Nifty expiry, a factor that typically leads to higher intraday volatility as traders square off positions in the derivatives segment.

3) Rise in India VIX: The volatility index, known as India VIX, rose over 3 percent to the 11 level, indicating growing nervousness among traders. A higher VIX generally reflects increased market uncertainty and the potential for sharper price swings.

"There is a heightened risk aversion and markets will remain range-bound, with quarterly earnings and evolving global tariff developments driving the trajectory," Siddhartha Khemka, head of research of wealth management at Motilal Oswal Financial Services told Reuters.

4) Global cues remain weak: Asian markets traded lower, adding to the cautious mood. South Korea’s Kospi and Shanghai’s Composite Index were down up to 1 percent, while Japan’s Nikkei 225 and Hong Kong’s Hang Seng declined up to 3 percent. Wall Street futures also quoted up to 0.5 percent lower, signalling a weak start for US markets later in the day.

5) Rupee declines:  The rupee depreciated 9 paise to 88.77 against the US dollar in early trade, pressured by a stronger greenback overseas and foreign fund outflows.

"Equity markets saw broad-based profit-booking amid a lack of fresh domestic triggers, as weak cues from Asian and European peers dampened investor sentiment. Renewed US–China trade tensions reignited risk aversion, prompting a shift toward safe-haven assets such as gold and US Treasury bonds, while equities came under pressure on concerns of escalating global trade uncertainty," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, told PTI.

6) Crude rises: Brent crude, the global oil benchmark, rose 0.33 percent to USD 63.53 a barrel. Rising crude prices generally weigh on Indian equities as they can stoke inflation and widen the country’s trade deficit.

Analysts’ view

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said key support levels lie at 25,150/82,000 and 25,100/81,800. "If the market falls below these levels, it could retest 25,000-24,950/81,500-81,300. On the upside, resistance is seen at 25,350-25,400/82,500-82,800. Failure to cross 25,330/82,655 may signal further weakness," he added.

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