Bulls lose ground! Sensex sinks over 1,000 points, Nifty slips below 22,900; 5 key triggers behind selloff

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ET Online

At 10.40 AM, Sensex dropped over 400 points to 74,322 while Nifty 50 lost over 100 points to trade below the 23,100 level. Broader markets also remained in the red, with Nifty Smallcap 100 and Nifty Midcap 100 indices dropping up to 0.5%.

The benchmarks Nifty and Sensex had jumped nearly 3% last week, their best weekly performances in six months, aided by a rally in IT stocks after stronger-than-expected quarterly earnings and a selloff in global AI markets that prompted value-buying elsewhere.

Axis Bank shares dropped around 4% to lead losses on Sensex, while HDFC Bank, Bajaj Finserv, HUL, Infosys, NTPC, Trent and Kotak Mahindra Bank shares fell around 1% each. Bucking the trend, SBI and UltraTech Cement shares gained around 2% each, while Reliance Industries, TCS, Adani Ports, Titan, HCL Tech, L&T, Power Grid and Maruti Suzuki shares gained around 1% each.

Among the sectors, Nifty PSU Bank index jumped around 3% to lead gains amid a muted market. Nifty Private Bank however slipped more than 1%. The overall market breadth turned negative, with NSE seeing 1,050 advances against 2,001 declines, while 125 stocks remained unchanged.

What lies ahead for Dalal Street?

The momentum created by the 2.8% surge in Nifty last week and the good results from the banking majors after the better-than-expected results from the leading IT companies have the potential to keep the market resilient, said V K Vijayakumar, Chief Investment Strategist, Geojit Investments. He however noted that the escalation of the tensions in Hormuz and the consequent surge in Brent crude to $109 will act as a strong headwind to the market.

“Even though the attractive valuations of the large-caps and the appreciation of the rupee have turned the stance of FIIs towards India a bit positive, it is unlikely to sustain, given the high crude price. Large-caps outperforming the mid-and small-caps is a rational trend, and this is likely to sustain, going forward. The market actions this week are likely to be stock-specific in response to the Q2 results,” he added.

Technical view on Nifty

Markets may trade sideways with heightened intraday swings due to Monday’s weekly expiry settlement, said Hemang Gor, Senior Research Analyst – Derivatives & Technical Research, Axis Direct.

Nifty holding 23,000 remains crucial, while 22,950- and 23,300-mark key support and resistance for the day, according to the analyst.