Why did Sensex and Nifty 50 fall today? Here are the 5 reasons you should know

Synopsis: The Indian stock market has experienced a significant fall today, with both the Nifty 50 and Sensex showing a considerable decline. Investors and traders are closely watching the evolving global and domestic market conditions as they try to understand the reasons behind this Bearish market.

In today’s session, both indices opened with a mixed sentiment, reflecting negative views from the start. As trading continued, selling pressure increased, causing a further decline in the indices. This led to a sharp intraday fall for both the Sensex and Nifty, highlighting the negative sentiment among market participants.

Index Overview  

The equity benchmark indices extended their losses for the third consecutive session on Tuesday, as a combination of factors weighed on investor sentiment.

The Nifty Index opened at 26,087.95, marking a gap-down opening from its previous close of 26,175.75, and fell by nearly 170 points from the previous close. Meanwhile, the Sensex Index opened at 85,325.51, representing a gap-down from its previous close of 85,641.90, but has since declined by more than 550 points from the previous close.

Here are the reasons for the fall

The Indian rupee hit a record low of Rs. 89.92 against the US dollar, weighed down by strong demand from corporates, importers, and foreign investors, coupled with high crude oil prices, and this put pressure on the broader market sentiment.

Foreign Institutional Investors offloaded equities worth Rs. 1,171.31 crore on Monday, marking the third consecutive session of outflows this month. Persistent FII selling generally weighs on domestic markets, as it reflects weakening overseas appetite for risk assets.

There has been no sustained buying interest near record highs for four sessions, suggesting a possible pause in market momentum, Osho Krishan, chief manager of technical and derivative research at Angel One, told Reuters.

The ongoing consolidation around record highs also indicates that investors are refraining from chasing the index at elevated levels, instead waiting for a meaningful pullback before taking fresh positions, Nilesh Jain, head of technical and derivatives research at Centrum Broking, told Reuters.

Global markets were also under pressure, with key Asian indices, including Shanghai’s SSE Composite, trading lower. Additionally, US markets closed in the red, contributing to a cautious mood among investors.

The Nifty Private Bank index slipped up to 0.4 percent as banks responded to the recent changes in Nifty Bank weightages, with heavyweights HDFC Bank and ICICI Bank emerging among the top losers. 

SEBI had directed the NSE to reduce the concentration of weights in indices that have futures contracts, including the Nifty Bank. As per the final guidelines, the weightage of the top three constituents will now be capped at 19%, 14%, and 10%, respectively.

Anand James, Chief Market Strategist at Geojit Financial Services, noted that momentum was subdued in the previous session, as buyers pulled back, causing the index to drift lower. 

He added that bulls could try to regain control if the Nifty moves back into the 26,110–26,060 range. If this band fails to hold, the index may test 25,860–25,700 or even 25,300, although such a sharp decline seems less likely on Tuesday.

Written by Sridhar J

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