Indian equity benchmarks resumed their downward trend on Monday after a brief pause, with significant selling pressure observed across IT, metals, realty, and banking sectors. The 30-share BSE Sensex pack dropped 382.62 points, or 0.50 per cent, to close at 76,132.81. Concurrently, the NSE Nifty50 index declined by 118.55 points, or 0.50 per cent, settling at 23,779.15.
Key Factors Behind the Market Drop
Market sentiment was primarily impacted by renewed geopolitical concerns and elevated US bond yields, which fueled foreign fund outflows from domestic equities. Ankur Punj, Managing Director at Equirus Wealth, noted that investors reduced their equity exposure due to worries about a fresh escalation in the US-Iran conflict.
Major Sensex laggards included Infosys Ltd, Reliance Industries Ltd (RIL), State Bank of India (SBI), Tata Consultancy Services Ltd (TCS), Tata Steel Ltd, Eternal Ltd, UltraTech Cement Ltd, and Kotak Mahindra Bank Ltd.
Volatility and Broader Market Trends
The India VIX, often referred to as the 'fear index', rose by 5.62 per cent during the session, indicating increased market volatility. Vinod Nair, Head of Research at Geojit Investments, highlighted that domestic benchmark indices remained influenced by developments in the Strait of Hormuz. However, he observed a divergence in the broader market, with small-caps and select mid-caps showing gains driven by stronger earnings.
Nair also suggested that value buying has gained traction following a previous sell-off, making valuations attractive as corporate earnings shift from downgrades to upgrades. Despite this, he cautioned that the broader market rally might be becoming stretched, leaving equities vulnerable to potential supply-chain disruptions and weaker macroeconomic indicators.
Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, added that rising crude prices amidst the escalating US-Iran conflict and renewed concerns over US interest rates further weighed on investor sentiment, causing Indian equities to end lower despite a rebound in most Asian markets.
Nifty Outlook
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, indicated that the underlying trend for the Nifty remains negative with a lacklustre movement. He projected that after moving below the immediate support of 23,800, the Nifty is expected to slide further to the next lower support level of 23,600 in the near term. Immediate resistance is placed at 24,000 levels.