Sensex falls nearly 200 pts from day's high, Nifty below 26,200: 5 key reasons behind market decline

Stock market today: Sensex, Nifty decline amid profit booking. 

The equity benchmark indices Sensex and Nifty retreated on Tuesday, snapping a two-day rally, as selling pressure emerged in information technology stocks amid profit booking.

At around 11:15 a.m., the Sensex declined 13.82 points or 0.016 percent to 85,553.66, after falling nearly 200 points from the day’s high. The Nifty slipped to 26,168.55, down 3.85 points or 0.015 percent.

1) FII selling: Foreign Institutional Investors (FIIs) sold equities worth Rs 457.34 crore on Monday, according to exchange data. The selling came after three consecutive sessions of net buying by overseas investors.

2) Selling in IT shares: IT stocks witnessed profit booking after four straight sessions of gains. Coforge and Infosys were among the major laggards, declining by up to 5 percent.

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3) Profit booking across sectors: Domestic equities saw profit booking after two days of a sharp rally. IT and consumer durables stocks declined the most during early trade.

4) Nifty weekly expiry: Tuesday is also the weekly expiry of Nifty index derivatives. On expiry days, markets tend to witness higher volatility as traders adjust or unwind their positions, leading to sharp intraday swings in benchmark indices.

5) Holiday-shortened week: Market participants remained cautious amid expectations of subdued trading volumes during the holiday-shortened week.

Commenting on the outlook, Anand James, Chief Market Strategist at Geojit Investments Limited, said the clean break above the declining trendline that had capped the market so far this month has improved confidence of a move towards 26,300 and higher. However, he said the downside marker has shifted upwards to 26,100, and a slip below this level could lead to sideways movement.