Sensex falls 500 pts from day's high, Nifty near 25,400: Weak global cues among key factors behind market decline

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

• Sensex and Nifty erased early gains, trading flat amid volatility.
• Profit booking and weak global cues weighed on market sentiment.
• Rising crude prices and expiry-related volatility hit indices.

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The benchmark equity indices gave up early gains and were trading in negative territory post noon on Thursday amid profit booking and weak global cues.

The Sensex rose 303.09 points or 0.36 percent to hit an intraday high of 82,579.16 in early trade. The broader Nifty climbed 90.45 points or 0.35 percent to 25,572.95. Initial gains were led by IT stocks following robust earnings from Nvidia.

However, the indices pared gains subsequently. At around 12:20 pm, the Sensex was trading 204.65 points or 0.25 percent lower at 82,071.42, while the Nifty was down 47.70 points or 0.19 percent at 25,434.80.

Bank Nifty declined nearly 400 points and was trading in negative territory at 60,861.90 level.

Coal India, Power Grid Corporation of India and State Bank of India were among the major laggards in the Nifty pack, declining up to 1 percent, while Tata Motors Passenger Vehicles and Tech Mahindra were the top gainers, rising up to 2.5 percent.

Key reasons behind market paring gains

1) Rise in crude prices: Oil prices hovered near seven-month highs amid uncertainty over US-Iran nuclear talks and concerns over potential supply disruptions. Higher crude prices are negative for India, which imports a majority of its oil requirements, as they can widen the trade deficit and stoke inflationary pressures.

2) Profit-taking: Profit booking was witnessed in FMCG, metal and realty stocks after the initial upmove.

"A significant takeaway from the current market trend is that despite large institutional buying — FII and DII combined — the market is not surging. Yesterday the combined institutional buying in the cash market was a massive Rs 8,100 crore. Yet the market couldn’t sustain the early gains since the ‘sell on rally’ trend emerged, wiping out the early gains," said Dr V K Vijayakumar, Chief Investment Strategist, at Geojit Investments.

"As the market rallies and valuations get stretched, bears are getting stronger and shorts are increasing, pulling the market down. This trend may continue in the near term, capping the upside," he added.

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3) Weak global cues: In Asian markets, Shanghai’s SSE Composite index and Hong Kong’s Hang Seng index were quoting lower. Wall Street futures declined up to 0.3 percent, indicating a weak opening for US markets.

4) Expiry-related volatility: Thursday also marks the monthly expiry of Sensex derivatives contracts. Markets typically witness heightened volatility on expiry days due to the unwinding or rollover of positions.

5) Geopolitical concerns: Geopolitical concerns also weighed on investor sentiment amid renewed tensions between the US and Iran over Tehran’s nuclear programme.

Technical outlook

Anand James, Chief Market Strategist at Geojit Investments, said the 200-day simple moving average (SMA) has held firm in recent sessions, though follow-up momentum has remained limited.

"We will go in today, continuing to eye yesterday’s upside turnaround level of 25,670 to confirm strength, in order to aim for 25,900. Downside marker may be placed at 25,530," he said.

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