Taking Stock | Sensex, Nifty tumble over 1% on profit booking amid broad-based selloff

Sensex, Nifty tumble over 1% amid global jitters, profit booking

Benchmark indices ended sharply lower on May 20, weighed down by market-wide profit booking, with all sectors ending in red and Nifty 50 sliding further below the 25,000 level.

The Sensex closed with a loss of over one percent to settle at 81,186, while Nifty slipped by a percent to end at 24,683.

The broad-based selloff was marked by Auto, Healthcare and Financial Services among the worst performers. The broader market indices too were under pressure, with the Nifty Midcap 100 down 1.6 percent and Nifty Smallcap 250 lower by 0.9 percent.

Investor mood soured amid a fresh surge in Covid-19 cases across Southeast Asia, particularly in high-density regions like Hong Kong, Singapore, China, and Thailand. Moody’s downgrade of the US credit rating further weighing on global risk appetite.

Outlook for May 21

Prashanth Tapse, Senior VP (Research), Mehta Equities

While markets had witnessed a pullback rally over the past week due to Indo-Pak ceasefire, US-China heading towards a tariff understanding and strong FII fund inflows, the mood is reversing back to caution with a negative bias. The current situation shows that markets will see bouts of optimism followed by a volatile phase as global economic uncertainty remains a key challenge for investors.

Rupak De, Senior Technical Analyst at LKP Securities

The Nifty slipped after two days of consolidation, dragged down by broad-based selling and weakening market breadth. Despite this decline, the short-term trend remains strong, although there is a possibility of a deeper pullback toward the 21-day EMA on the daily timeframe. The negative divergence on the daily RSI has added to the bearish sentiment. If Nifty sustains below 24,700, the correction could extend further, potentially towards 24,300. However, if the index moves back above 24,700, it may signal a return to a consolidation phase

Vinod Nair, Head of Research, Geojit Investments

With the lack of major positive triggers and prevailing uncertainty over U.S. fiscal stability, investors opted for profit-booking and adopted a cautious stance. Selling pressure was widespread as participants awaited more clarity on the India-U.S. trade agreement. Given the current premium valuations and delays in the trade deal, we foresee a phase of short-term consolidation, which may lead FIIs to scale back their positions in the domestic market.