Sensex slips 250 pts, Nifty dips below 25,600 as banks, metals drag; India VIX rises 2%

Laggards on the index included Tata Consumer Products, Dr Reddy's, Hero MotoCorp, Kotak Mahindra Bank, and Maruti Suzuki.

Benchmark indices Nifty and Sensex extended their morning losses on Monday, dragged down by sharp declines in private bank, auto, and metal stocks, snapping a four-day winning streak. In contrast, the broader market remained resilient, with the rally in mid and smallcaps stretching into a seventh straight session.

At noon, the Sensex was down 261.27 points or 0.31 percent at 83,797.63, and the Nifty was down 64.10 points or 0.25 percent at 25,573.70. About 2,126 shares advanced, 1,400 shares declined, and 154 shares remained unchanged.

"The market momentum is strong, but some profit booking is likely in the near term," V K Vijayakumar, Chief Strategist at Geojit Investments Limited, said. However, a decline in geopolitical tensions in West Asia, the sharp pullback of Brent crude to $67 and reports of positive developments on the trade front with possibilities of trade deals between the US and China and the US and some major trade partners augur well for equity markets. Weakness in the dollar index continues to support FII inflows, and retail optimism continues to support flows into domestic funds.

Sectoral performance on the NSE was mixed on Monday. Nifty PSU Bank led the gains with a sharp 2.51 percent rise, followed by Nifty Smallcap 100 up 0.50 percent and Nifty Midcap 100 adding 0.24 percent. Nifty Pharma and Nifty Energy also ended in the green, up 0.21 percent and 0.13 percent, respectively, while Nifty Oil & Gas edged higher before paring gains.

On the downside, Nifty Realty was the worst performer, slipping 0.60 percent, followed by Nifty Private Bank down 0.51 percent and Nifty FMCG lower by 0.36 percent. Nifty Metal fell 0.35 percent, Nifty Bank declined 0.18 percent, and Nifty Infra lost 0.13 percent. Nifty Auto, Consumer Durables, and IT saw marginal losses. Meanwhile, volatility edged up, with India VIX climbing 2.15 percent to 12.65.

"Technically speaking, and like we have been highlighting, a trending move post the over month-long consolidation is already underway." Akshay Chinchalkar, Head of Research at Axis Securities, said. "We are now testing an important upside hurdle between 25,640 and 25,740, followed by a rising channel peak around 25,800, so once we clear this zone, the next logical objective will be the all-time high at 26,277. Immediate support lies at 25,400, followed by 25,250," he added.

Shares of Rajkot-based Jyoti CNC Automation tumbled over 3 percent as a large deal took place in the block deal window. Around 6.06 percent equity or 1.37 crore shares in the firm were traded through the block deal route for Rs 1,499 crore. The shares were exchanged at Rs 1,087 per share, implying a 3.7 percent discount from the previous session's closing price.

Private sector lender Karnataka Bank's stock price tanked 6 percent after the bank's CEO, Srikrishnan Hari Hara Sarma, and Executive Director Sekhar Rao stepped down from their positions, citing personal reasons. Moneycontrol reported that differences between Sarma, Rao and the bank’s board on a certain expenditure incurred by the lender are said to have resulted in the chief executive wanting to step down from his position.

JB Chemicals and Pharmaceuticals nosedived as much as 7 percent after Torrent Pharmaceuticals acquired a controlling stake in the company from global private equity firm KKR at an equity valuation of Rs 25,689 crore (fully diluted basis). This marks the second-largest deal in India’s pharma sector, behind Sun Pharma’s 2015 acquisition of Ranbaxy.

SBI Life Insurance, HDFC Life Insurance, IndusInd Bank, Jio Finance and Shriram Finance were the top gainers on the index. Laggards on the index included Tata Consumer Products, Dr Reddy's, Hero MotoCorp, Kotak Mahindra Bank, and Maruti Suzuki.