Market Stumbles as Sensex Crashes Over 800 Points; Nifty Slips Below 24,800 Amid IT, Financials Sell-Off
Profit-booking, weak cues weigh on indices despite resilience in broader market
Sharp decline in benchmark indices led by IT, financials
On Tuesday, benchmark indices tumbled sharply, marking a sudden reversal after two consecutive sessions of gains. The BSE Sensex plunged by 844.55 points, or 1.03%, settling at 81,331.90, while the NSE Nifty dropped by 237.85 points, or 0.95%, to close at 24,763.30.
- This marked a pause in the short-term recovery rally observed earlier in the week.
- The decline was mainly triggered by weakness in IT and financial sectors, with investors locking in profits after Monday’s significant surge.
Broader market shows signs of resilience
Despite the fall in frontline indices, broader markets fared relatively better.
- The Nifty Midcap 100 dipped only 0.3%, reflecting selective buying interest.
- The Nifty Smallcap 100 even managed a minor gain of 0.07%, highlighting cautious optimism in micro and small-cap counters.
Sectoral drag: IT, banks, autos lead the correction
A majority of sectoral indices ended in the red, led by technology and financial stocks.
- Nifty IT declined by 0.86%, while Nifty Bank lost 0.76%, both denting overall market sentiment.
- Other sectors such as Auto, FMCG, Energy, and Infrastructure also posted cuts in the 0.7%–0.8% range.
- However, Nifty Realty showed modest strength, rising 0.29%, while Nifty Pharma remained flat.
Volatility on the rise as India VIX climbs
Market volatility increased amid the sell-off, with the India VIX, often seen as a fear gauge, spiking by 5.5% to touch 19.
- This suggests heightened investor caution amid ongoing uncertainty.
- Elevated VIX levels often precede market reversals or large directional moves.
Institutional outlook and investor positioning
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services:
“Mutual funds are sitting on substantial cash reserves, and dips are likely to be bought. However, high valuations may trigger selling on rallies.”
- He emphasized the slow accumulation in rate-sensitive sectors, particularly autos, in anticipation of further interest rate cuts, driven by a declining inflation trend.
Technical analysis: Nifty and Bank Nifty levels to watch
Hrishikesh Yedve, AVP at Asit C. Mehta Investment, observed that:
- The Nifty formed a bullish candle on the daily chart, with immediate resistance at 25,000.
- If the index sustains above this level, a move toward 25,200–25,250 is possible.
- On the downside, support is seen at the 21-Day EMA, near 24,530.
Meanwhile, Samco Securities highlighted the resilience of Bank Nifty, which remains above its major moving averages.
- The 20-day SMA at 54,980 is seen as short-term support.
- A sustained move above 55,700 could fuel further upside, potentially retesting the all-time high near 56,100.
Major movers: Top gainers and losers
Top gainers on the Nifty included:
- Bharat Electronics, Dr Reddy’s Labs, Cipla, IndusInd Bank, and Sun Pharma.
Top losers were:
- Grasim, UltraTech Cement, NTPC, M&M, and Axis Bank.
Company news: IndiGo and Olectra under pressure
Shares of InterGlobe Aviation dropped over 3% after co-founder Rakesh Gangwal offloaded a 3.4% stake in the company via a block deal, reportedly worth Rs 6,831 crore.
- This move is part of Gangwal’s ongoing strategy to gradually exit his holding in the airline.
Olectra Greentech saw a steep 14% decline following criticism from Maharashtra Transport Minister Pratap Sarnaik, who announced the cancellation of a Rs 10,000-crore e-bus order due to missed delivery deadlines.
- The company failed to deliver any of the 1,000 electric buses scheduled by May 22, leading to investor panic.
Outlook: Buy-on-dips remains favored amid caution
Despite Tuesday’s sharp correction, analysts suggest the broader market trend remains intact, provided key support levels hold.
- Accumulation in select sectors, improving macro indicators, and upcoming rate cut expectations could provide a tailwind.
- However, valuations and global cues remain crucial for sustained upside.
Investors are advised to remain selective, use dips for long-term opportunities, and monitor volatility metrics for near-term directional signals.
