After a record-breaking rally on Monday, the Indian stock market experienced a significant downturn today. Both the Sensex and Nifty indices succumbed to selling pressure, reversing a substantial portion of the previous day's gains.
The BSE Sensex fell by approximately 800 points, reaching a level of 81,606. Similarly, the NSE Nifty 50 declined by around 200 points, settling at 24,718. This decline followed Monday's surge, which saw the Nifty climb by a record 917 points to close at 24,925, marking its highest point in seven months. Monday's rally was fueled by easing geopolitical tensions, particularly the ceasefire between India and Pakistan related to Operation Sindoor, and a temporary truce in the trade dispute between the U.S. and China.
Several factors contributed to the market's reversal. Profit-booking after the previous day's substantial gains was a primary driver, as investors sought to capitalize on the rally. Additionally, market analysts pointed out that Monday's surge was largely driven by short-covering and retail investor enthusiasm, rather than strong institutional buying, suggesting limited momentum for further gains in the near term.
Sectoral performance was mixed during the downturn. The Nifty IT index experienced a significant decline, dragging down the overall market. Financial services, private banks, FMCG (Fast-Moving Consumer Goods), banks, realty, and auto sectors also faced downward pressure. Conversely, the pharma sector emerged as a top gainer, along with healthcare and PSU (Public Sector Undertaking) bank indices.
Foreign Portfolio Investors (FPIs) have invested $1.7 billion in Indian equities in May. On May 12, FIIs net bought Indian equities worth Rs 1,246.48 crore, while Domestic Institutional Investors (DIIs) net bought shares worth Rs 1,448.37 crore.
Looking ahead, traders are expected to closely monitor key economic indicators, including India's Consumer Price Index (CPI) and the U.S. Core CPI. Quarterly earnings reports from major companies like Bharti Airtel and Tata Motors will also be closely watched for their potential influence on specific sectors.
Despite the day's downturn, some analysts remain optimistic about the overall trend in the Indian markets, citing easing geopolitical tensions, progress in trade agreements, and signs of growing economic stability as supportive factors. However, caution is advised, and investors are recommended to adopt a "buy-on-dips" strategy, capitalizing on any future market corrections.
