Sensex closes 500 pts lower from day's high, Nifty ends below 25,900: Four reasons behind market decline

Sensex falls 500 pts from day's high, Nifty below 25,900: Four reasons behind market decline

Benchmark indices Sensex and Nifty gave up their day's gains on November 25 and closed in red in a volatile trading session. Sensex closed down 313.70 points or 0.37% at 84,587.01, and the Nifty was down 74.7 points or 0.29% at 25,884.80. About 2,022 shares advanced, 1,972 shares declined, and 149 shares were unchanged.

Sensex fell 500 points from day's high while Nifty gave up the 25,900-mark. Sensex's day high was 85,110.

Here are key reasons behind market fall:

Monthly Nifty F&O Expiry 

Volatility was seen on November 25 ahead of the monthly Nifty F&O expiry. Markets are likely to remain muted in this session ahead of monthly derivatives expiry, with focus on whether foreign investors roll over their short positions or opt to trim them, analysts told Reuters.

"Market focus is on whether foreign investors roll over their short positions or opt to trim them on expiry day," Devarsh Vakil, head of prime research at HDFC Securities told Reuters.

Investors will also await US inflation reading, due on Wednesday, which could provide cues on Federal Reserve's rate cut decision scheduled for early next month.

Mixed global cues

"The global clues are mixed today: the rally in the U.S. markets and expectations of a 25 bps rate cut from the Fed are positive for global equity markets. But the sharp 2.69% rally in Nasdaq and the big rebound in Mag 7 stocks will again trigger fears of an AI bubble," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

India will benefit on a sustained basis only when the AI trade weakens and money starts flowing into EMs like India and into non- AI stocks, added Vijayakumar.

Nifty IT index was trading 0.7% lower with LTIMindtree, Infosys, HCL Technologies leading the losses.

On November 25, Wall Street futures were trading in mild red.

Asian share markets shifted higher on Tuesday as hopes grew the Federal Reserve will deliver a December interest rate cut, while investors piled into global technology stocks, shrugging off concerns the sector was becoming overheated.

FII selling

FII selling continued for second day on November 24. Nifty’s attempt to break the 2024 September high and set new record is facing resistance particularly from resumption of big FII selling which touched Rs 4,171 crore in the cash market yesterday, said Vijayakumar.

"Corporate earnings in India are likely to gather momentum going into Q3 results season and accelerate in CY 2026. Combination of these factors have the potential to reverse the FII outflows. Expectations of Nifty touching new highs soon and an imminent trade deal between the US and India can bring the FIIs back into the Indian market," Vijayakumar said last week.

Sell on rise continues 

Analysts said Nifty has to sustain above 26,000 for further up move in the markets. Sell on rise is visible at higher levels, they said.

"Structurally, the higher–top higher–bottom pattern remains intact, and Nifty continues to hold above key moving averages, keeping the primary trend positive. However, given the persistent weakness in broader markets and Nifty repeatedly encountering resistance at the rising trendline connecting the major swing tops of June (25,670) and October (26,104), a cautious and highly selective approach is warranted until the index decisively crosses the recent high or marks a fresh new high," said Rajesh Bhosale, Equity Technical Analyst, Angel One.

Among individual stocks, oil marketing companies BPCL, HPCL and Indian Oil fell about 1.5% each after Investec downgraded the shares to "sell" from "hold", citing pressure on diesel marketing margins.

Among sectoral indices, the Nifty Media and Nifty IT fell the most. Shares of information technology companies such as LTIMindtree, Infosys, and HCL Technologies fell 1% each. Among media stocks, PVR Inox was down over 3%, the worst performer.

"Given the prevailing volatility and global uncertainty, traders are advised to maintain a selective buy-on-dips approach, manage leverage prudently, and employ tight trailing stop-losses along with staggered profit-booking. Fresh long positions may be considered only above 26,300, supported by close tracking of global cues and key technical levels," said Amruta Shinde, Technical & Derivative Analyst at Choice Equity Broking Private Limited.

Bank Nifty also closed at nearly day's low by giving up day's gains and closing over 350 points lower from day's high.