Sensex gives up 600 points from day’s high, Nifty loses election steam after facing resistance at 24,350

Nifty struggled to sustain its gains as it faced selling pressure near the resistance zone.

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26 Aug, 2025 12:21

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The Sensex and Nifty gave up part of their strong intraday gains on Monday as the markets struggled to sustain election results momentum near critical resistance levels amid continued earnings worry. Manish Sonthalia, Chief Investment Officer at Emkay Investment Managers, pegged Nifty's fair value at 22,500, citing subdued earnings growth projections and sustained foreign investor outflows.

Analysts also pointed to significant resistance at the 24,350 level, which capped further upside despite early optimism driven by BJP-led NDA’s Maharashtra election victory.

At 1.30 pm, BSE Sensex was up 746 points or 0.9 percent at 79,863, while NSE Nifty was up 262 points at 24,169. However, both indices retreated from their respective intraday highs of 80,473 (over 600 points) and 24,351. Despite opening with a sharp gap-up of 350 points, Nifty struggled to sustain its gains as it faced selling pressure near the resistance zone.

Manish Sonthalia said in an interview with CNBC TV18 that the broader challenges persist for the Indian market. Further, Sonthalia said that with average earnings growth between FY25 and FY26 projected at only 12 percent, the Nifty could fall to 22,000.

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The foreign portfolio investor (FPI) outflows are likely to continue as capital shifts from emerging markets to the US. “We saw a 10 percent correction recently due to FII liquidation,” said Sonthalia.

The FII selling has been a persistent headwind in the Indian market, with net outflows of nearly Rs 40,000 crore so far in November and Rs 1.54 lakh crore since October. However, domestic institutional investors (DIIs) have helped stabilise the market with nearly similar amounts of buying.

The trading session also reflected cautious sentiment, with options data showing significant call writing at the 24,400 strike and firm put writing at the 24,200 strike, marking the immediate resistance and support levels for the Nifty.

The morning rally, driven by short covering and enthusiasm following the BJP-led Mahayuti alliance’s landslide victory in Maharashtra, began to wane as investors took a more cautious stance. PSU stocks, which surged earlier in the day, also saw some profit-booking, though they continued to remain in focus amid expectations of increased government spending.

Broader market sentiment was positive, with 2,555 stocks advancing against 936 declines. However, analysts believe the Nifty will need to decisively break above the 24,350 level to sustain further gains.

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