Sensex settles 300 pts lower, Nifty ends below 25,800: Upcoming Fed policy outcome among key factors behind market decline

Stock market today: Sensex, Nifty decline amid profit booking. 

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26 Aug, 2025 12:21

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The equity benchmark indices settled lower for the third straight session on Wednesday as investors stayed cautious ahead of the US Federal Reserve’s policy signals for 2026, while the continued foreign fund outflows also weighed on the sentiment. A shap sell-off was seen in consumer durables, private banks and IT shares.

In a volatile session, the Sensex dropped by 275.01 points or 0.32 percent to settle at 84,391.27, a level not seen since November 11. During the day, it hit an intraday high of 85,020.34 and a low of 84,313.62.

The Nifty fell by 81.65 points or 0.32 percent to close at a month's low of 25,758. In the intraday session, it hit a high of 25,947.65 and a low of 25,734.55.

InterGlobe Aviation, ETERNAL and HDFC Bank were among the major laggards in the Nifty50 pack, declining up to 3 percent, while Hindalco Industries and Eicher Motors were among the top gainers, rising up to 2 percent.

1) Fed signals in focus: Markets are widely expecting a third rate cut by the Federal Reserve tonight. However, investors are looking for clarity on the central bank’s stance for 2026 amid differing views among Fed officials on inflation and labour market risks. Uncertainty around the likely successor to Chair Jerome Powell, whose term ends in May, has also tempered expectations of deeper cuts.

"Focus is on the upcoming U.S. Fed meeting, where a 25 basis points rate cut is widely expected. However, internal divisions and mixed economic indicators may temper expectations for further rate cuts in 2026," Vinod Nair, Head of Research, Geojit Investments Ltd, said.

2) Weak global cues: Major Asian indices, including Shanghai’s SSE Composite, Hong Kong’s Hang Seng and Japan’s Nikkei 225, were trading lower. Overnight, Wall Street also ended broadly weaker.

"Indian markets mirrored global caution, weighed down by persistent FII outflows, INR weakness, and uncertainty surrounding US-India trade negotiations despite ongoing discussions. In the near term, market direction will be influenced by central bank cues and clarity on trade developments," Nair added.

3) Continued FII selling: Foreign Institutional Investors offloaded equities worth Rs 3,760.08 crore on Tuesday, marking the ninth straight session of net selling. Persistent FII outflows generally put pressure on Indian markets as they reduce liquidity and reflect risk aversion toward emerging-market assets.

4) Crude oil firm: Brent crude rose 0.15 percent to USD 62.03 per barrel. Rising crude prices tend to weigh on domestic equities as India is a major importer of oil, and higher prices can add to inflationary concerns and impact corporate margins.

Technical Analysis

Rupak De, Senior Technical Analyst at LKP Securities, noted "Again, bears remained at the helm as the Nifty revisited yesterday’s low, reinforcing a bearish bias. The index once again found support near the 50 EMA. The RSI on the daily timeframe has slipped out of its recent consolidation. Moreover, the index has broken below the 50 percent retracement of the privous rise from 25,318 to 26,325, indicating weakness. In the short term, the index is likely to stay under pressure with immediate support at 25,700. A decisive breakdown below this level could open a correction toward 25,610 and 25,530. On the upside, resistance is placed at 25,870 and 25,960-26000."