Sensex falls nearly 300 pts from day's high, Nifty below 25,900: FII selling, 5 other key factors behind market decline

Stock market today: Sensex, Nifty decline in trade. 

The benchmark equity indices Sensex and Nifty declined on Tuesday amid continued foreign fund outflows and a muted trend in global markets, which dampened investor sentiment.

At around 12:15 p.m., the Sensex fell 180.08 points or 0.21 percent to 84,515.46, while the broader Nifty dropped to 25,884.55, down 57.55 points or 0.22 percent.

Earlier, Sensex rose 200 points to an intraday high of 84,802.64, while the broader index Nifty made a high of 25,975.85.

ETERNAL, Max Healthcare and InterGlobe Aviation were among the major laggards in the Nifty50 pack, declining up to 2 percent, while Shriram Finance and Hindalco Industries were among the top gainers, rising up to 2 percent. Market breadth turned negative as about 1518 shares advanced, 2078 shares declined and 172 shares remained unchanged.

Key factors behind market decline

1) FII selling: Foreign Institutional Investors (FIIs) sold equities worth Rs 2,759.89 crore on Monday, marking the fifth consecutive session of net outflows. Sustained selling by overseas investors continued to put pressure on domestic equities.

2) Weak global cues: Asian markets traded lower, with South Korea’s Kospi and Japan’s Nikkei 225 index quoting in the red. US markets also ended lower on Monday. Weak global cues tend to weigh on Indian equities as they influence investor risk appetite and fund flows.

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3) Nifty expiry: Tuesday was also the weekly and monthly expiry of Nifty derivatives contracts. Expiry sessions typically see higher volatility as traders roll over positions or square off existing ones, leading to sharp intraday movements.

4) Selling in UT shares: Profit booking was witnessed in key sectors such as information technology (IT), pharmaceuticals and real estate. The Nifty IT index extended its fall for the fifth straight session.

5) Rise in crude oil prices: Brent crude, the global oil benchmark, rose 0.03 percent to USD 61.96 per barrel. Higher crude prices can raise input costs and inflation concerns for India, a major importer of oil, thereby impacting market sentiment.

6) Rise in India Vix: The fear gauge or the volatilty index rose more than 1 percent to 9.84, indicating increased uncertainity among investors.

Technical outlook

Anand James, Chief Market Strategist at Geojit Investments, said the Nifty’s inability to sustain above the 26,050–26,077 zone has triggered a downward bias towards the 25,935–25,850 levels.

"However, we expect attempts to pull back early in the day, though we will wait for at least a push above 25,970–26,000 to play such upswings," he said.

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