Domestic stock market witnessed a sharp decline on Monday, with Sensex and Nifty falling by 1.6 per cent on concerns over slower corporate earnings for the third quarter and on selling by foreign portfolio investors.
The BSE’s 30 share Sensex fell 1,258.12 points, or 1.59 per cent to close at 77,964.99. The index declined by 1,441.49 points during intraday trades.
The Nifty 50 lost 388.7 points, or 1.62 per cent, to finish at 23,616.05.
“There are already concerns that the forthcoming third quarter earnings could be muted for several sectors due to weak government spending and subdued demand, which is pushing investors, especially the FIIs (foreign institutional investors), to further slash their domestic equity bets,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
The sell-off in the market can also be attributed to a rise in foreign institutional investor (FII) selling. Foreign portfolio investors (FPIs) have started the year 2025 on a selling spree, offloading Rs 4,285 crore worth of domestic equities on a net basis in the first three trading days (January 1-3) of the new year amidst strong dollar, higher US bond yields and caution ahead of the release of third quarter results of corporates.
“Fears related to the new Human metapneumovirus (HMPV) have added to the bearish sentiment, triggering fresh rounds of selling after the recent counter-trend pullback rally,” said Santosh Meena, Head of Research, Swastika Investmart.
Among the sectors, all major sectoral indices witnessed profit booking at higher levels, with the public PSU banks and capital market indices lost the most, shedding over 3.5 percent.
On Monday, both Nifty and Bank Nifty slipped below their 200-day moving averages (DMA). Nifty PSU Bank index dropped 4 per cent.
“We believe that the current market texture is weak but oversold; therefore, level-based trading would be the ideal strategy for day traders,” said Shrikant Chouhan, Head Equity Research, Kotak Securities.
For day traders, as long as the market is trading below 23,750/78,200, weak sentiment is likely to continue. Below this level, it could retest the 23,500/77,600 mark. Further downside may also occur, potentially dragging the index down to 23,400/77,300. Conversely, if it rises above 23,750/78,200, the market could bounce back to the 23,900-23,950/78,600-78,800 range, he said.
Investors will now focus on the next month’s Union Budget announcement and the government’s action plan to boost demand and measures to overcome global challenges.
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