Sensex slumps 700 points: Why Indian markets fell after Monday’s rally?

After a spectacular rally on Monday that lifted investor sentiment, the Indian stock market opened on Tuesday on a cautious note, with the BSE benchmark gauge Sensex declining by 700 points in early trade. The NSE Nifty dropped 117.2 points to 24,807.50.

The market slipped into the red early on as traders booked profits and awaited stronger institutional cues.

The Nifty 50 opened at 24,864.05, down 60.65 points or 0.24%, while the BSE Sensex began the day at 82,249.60, falling 180.30 points or 0.22%. While the indices recovered mid-session, the early dip highlighted investor hesitation following Monday’s sharp gains.

Profit booking effect

According to ANI, market experts attributed Tuesday’s low start to profit booking, which is a natural response after the Nifty had jumped nearly 3.8% a day earlier. Following Monday’s strong market performance, investors engaged in profit booking, leading to a pullback in stock prices.

Ajay Bagga, Banking and Market Expert, told ANI, “Indian markets surged, though the FPI and DII numbers were muted, which means that non-institutional buying was the major prop for the Indian markets. This morning, futures are tepid, but if the buying is coming from domestic retail and domestic HNI prop desks, then it should continue”.

US-China trade deal

Another factor, which could have contributed to today’s low start, is the impact of the US-China trade deal, which resulted in a tariff halt between the two economies for the next 90 days.

Internationally, markets digested the trade deal that altered the global economic outlook. However, experts say the agreement did little to shift strategic realities and was seen more as a reset in tone than a breakthrough.

Sectoral weakness

In sectoral performance, Nifty Pharma led the gains with a rise of 1.2 per cent, while Nifty PSU Bank also traded in the green. On the other hand, most other sectoral indices were in the red, with Nifty IT declining by more than 1 per cent.

Top gainers and losers today

From the Sensex firms, Infosys, Eternal, Power Grid, Kotak Mahindra Bank, ICICI Bank, HCL Tech, Tata Consultancy Services and Nestle were among the major laggards.

Sun Pharma, IndusInd Bank, Bajaj Finance and Tata Steel were the gainers.