Indian equity markets experienced a significant correction on Tuesday following Monday’s impressive rally.
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The Sensex declined by 1,093.86 points or 1.32 percent to hit an intraday low of 81,336.04, and the broader Nifty dropped 289.8 points or 1.16 percent, settling below the crucial 24,650 mark at 24,634.90. This retracement led to an erosion of Rs 63,487.9 crore in market capitalization.
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The sharp decline in domestic equity benchmarks was predominantly driven by profit booking in IT, FMCG, Financials, and Auto sectors. Dr. Reddy’s Laboratories, Jio Financial Services, Cipla, and Sun Pharmaceutical Industries emerged as the top gainers in the Nifty50 pack. Conversely, Infosys, Hindalco Industries, Power Grid Corporation of India and HCL Technologies were among the major laggards, each declining up to 3 percent.
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Despite the overall market decline, market breadth remained positive with approximately 2,300 shares advancing, 859 declining, and about 140 shares remaining unchanged. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, emphasized the nature of the market rally observed on Monday.
Sensex declines on profit booking
“It is important to understand that the sharp 916-point surge in Nifty was not caused by institutional activity. The combined FII and DII buying yesterday was only Rs 2,694 crore. This means the market surge was triggered by short-covering and HNI plus retail buying,” Vijayakumar said.
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On Monday, Foreign Institutional Investors (FIIs) acquired equities worth Rs 1,246.48 crore, following a day’s pause. Additionally, the global oil benchmark Brent crude slightly dipped by 0.23 percent to trade at USD 64.81 per barrel. In the broader markets, indices bucked the general trend, with the Nifty Midcap100 rising by 0.26 percent and the Smallcap 100 index increasing by 0.65 percent around 10:30 AM.
Asian markets exhibited mixed results; South Korea’s Kospi, Japan’s Nikkei 225, and Shanghai’s SSE Composite index traded positively, while Hong Kong’s Hang Seng showed declines. In the United States, major benchmarks concluded Monday’s session significantly higher. The Nasdaq Composite surged by 4.35 percent, the S&P 500 saw a 3.26 percent increase, and the Dow Jones Industrial Average climbed by 2.81 percent.
