Markets in red: Sensex falls 600 pts from day's high, Nifty below 23,400: 7 key reasons behind market decline

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

• Sensex and Nifty slipped after early gains due to profit booking.
• IT, FMCG, and financial shares led losses amid Fed policy jitters.
• Rupee weakened as crude prices rose and FIIs continued selling.

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The benchmark equity indices Sensex and Nifty slipped from their day’s high around noon on Tuesday as investors booked profits after Monday’s sharp rebound. The domestic markets had risen more than 1 percent in the previous session following heavy losses in the three trading days earlier. On Monday, the Sensex jumped 938.93 points or 1.26 percent to settle at 75,502.85. The Nifty climbed 257.70 points or 1.11 percent to close at 23,408.80.

In early trade today, the Sensex rose 511.46 points or 0.67 percent to touch a high of 76,014.31. The Nifty also reclaimed the 23,500 mark and hit 23,577.55.

However, the indices trimmed gains later in the session and turned red. At around 11:30 am, the Sensex was down 104.93 points or 0.14 percent at 75,397.92, while the Nifty slipped 16.90 points or 0.07 percent to 23,391.90.

In the broader market, the Nifty Smallcap100 and Nifty Midcap100 indices bucked the trend and were trading up to 0.2 percent higher.

Wipro, Cipla and Bajaj Finance were among the major laggards in the Nifty50 pack, declining up to 3 percent, while ETERNAL and Tata Steel gained up to 4 percent. Market breadth was positive as about 2076 shares advanced, 1632 shares declined, and 138 shares unchanged.

Key factors behind market decline

1) Profit booking: Profit booking emerged at higher levels with IT, FMCG and financial shares leading the losses. The IT index was the biggest laggard, declining 0.8 percent ahead of the two-day US Federal Reserve policy meeting.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the recent market movement reflected uncertainty linked to the ongoing geopolitical tensions. "With total uncertainty and confusion regarding the trend of the war continuing, this uncertainty is getting reflected in the market, too. Even seasoned experts lack conviction to advise investors on the right strategy. All that can be said with conviction now is: remain invested and continue with SIPs. Nifty’s sharp bounce of 257 points yesterday was triggered mainly by short-covering from oversold territory," he said.

2) Persistent FII selling: Foreign institutional investors (FIIs) continued to remain sellers in the domestic market. FIIs sold equities worth Rs 9,365.52 crore on Monday. So far in March, foreign investors have sold shares worth over Rs 66,000 crore and are on course for their highest monthly outflow since January 2025.

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3) Rupee weakness: The rupee declined 14 paise to trade at 92.42 against the US dollar on Tuesday, weighed down by rising crude oil prices and continued foreign fund outflows. Forex traders said subdued domestic equities and a stronger US currency also pressured the local unit as investors remained cautious ahead of the US Federal Reserve’s interest rate decision. At the interbank foreign exchange market, the rupee opened at 92.35 and slipped further to 92.42 against the dollar.

4) Weekly expiry: Tuesday also marks the weekly expiry of Nifty derivatives contracts. Market participants often adjust or square off positions on expiry days, which tends to increase volatility.

5) Geopolitical concerns: The conflict involving the United States, Israel and Iran has entered its third week, with no immediate signs of easing. Fresh exchanges of fire were reported in parts of West Asia on Tuesday. Such developments typically weigh on global risk sentiment and can trigger cautious trading in equity markets, including India.

6) Higher crude prices: Brent crude was hovering around USD 103 per barrel amid concerns over supply disruptions. The Strait of Hormuz, a key oil transit route handling nearly one-fifth of global supply, remains largely shut. Rising oil prices are negative for India, which is heavily dependent on crude imports.

7) Fed policy jitters: The US Federal Reserve began its March 17–18 policy meeting on Tuesday. Markets largely expect rates to remain unchanged at 3.50–3.75 percent, but investors are watching the updated policy projections.

Devarsh Vakil, Head of Prime Research at HDFC Securities, said the rise in crude prices could influence inflation expectations. "The surge in crude prices this month is likely to shift the inflation outlook and lead most central banks to hold rates steady at their policy meetings this week," he said.

Technical outlook

Anand James, Chief Market Strategist at Geojit Investments, said the Nifty’s initial rebound towards 23,600 unfolded as expected, but momentum could remain limited. He said early moves on Tuesday may lack the strength seen in the previous session after the index retraced part of Monday’s gains towards the close.

According to him, the Nifty may see dips towards 23,276 initially, followed by sideways movement or attempts to move higher, though such advances may struggle to gather momentum.

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