Sensex on a rollercoaster ride, falls 500 points; What's going wrong?

The stock market on Tuesday experienced a rollercoaster ride as the benchmark indices swung between gains and losses before settling lower amid profit booking and sustained foreign fund outflows.

The Sensex, which had surged 379.86 points (0.45%) to an early high of 84,258.03, later tumbled nearly 1,200 points from its peak to touch 83,349.37, down 528.80 points (0.63%) by around 1 p.m. The Nifty mirrored the volatile trend, slipping below the 25,650 mark to trade at 25,633.10, down 157.15 points (0.61%) after touching an intraday high of 25,899.80.

Sectoral movers: Auto, IT, and pharma stocks led the declines, with Larsen & Toubro, Dr. Reddy's, and Cipla falling up to 2%. On the upside, Eternal and ONGC gained as much as 3%, offering some relief amid the market swings.

Markets had opened on a firm note after both indices ended about 0.4% higher on Monday, breaking a five-session losing streak that had erased nearly 2.5% from benchmarks. The early optimism was driven by hopes of renewed momentum in India-US trade talks following comments by the US envoy. However, gains were short-lived as selling pressure emerged across blue-chip stocks.

Why the rollercoaster? Eight key factors:

Profit booking: Investors squared off positions after early gains, reversing some of Monday’s recovery.

Persistent FII selling: Foreign institutional investors offloaded shares worth ₹3,638.40 crore, marking six straight sessions of net selling.

Rupee weakness: The rupee slipped 5 paise to 90.22 against the US dollar amid a stronger greenback, crude price rise, and capital outflows.

Trump’s new tariffs: US tariffs on countries trading with Iran stoked global trade worries, impacting India and other partners.

Nifty expiry: Weekly derivative contract rollovers added volatility.

Muted IT results: TCS and HCL Technologies reported significant profit drops, weighing on IT stocks.

Rising crude prices: Brent crude climbed 0.3% to USD 64.06/bbl, affecting trade balance and inflation outlook.

Weak global cues: Asian markets were tepid, while US futures suggested a soft Wall Street start.

Technical outlook: Anand James, Chief Market Strategist at Geojit Investments, said the Nifty faces resistance near 25,900, with potential to move toward 26,020 if momentum holds. However, a failure to stay above 25,775 could trigger a slide toward 25,715–25,620, though a sharper fall seems unlikely in the short term.

The Sensex’s ride today highlights the market’s volatility, reflecting the interplay of domestic factors, global cues, and investor sentiment.

Disclaimer: Views expressed are those of experts and not Moneycontrol.com. Please consult certified financial advisors before making investment decisions.