Why the stock market ended lower today? Sensex down 503 pts, Nifty below 26,050. 5 factors that dragged D-St lower

Synopsis
Indian equities retreated on Tuesday, with the Sensex and Nifty falling after touching record highs in the previous session. Investors engaged in profit-taking, while foreign funds continued to reduce their holdings. This combination of domestic selling and external pressures led to the benchmarks closing lower.
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Indian equities closed lower on Tuesday, with the Sensex and Nifty retreating after briefly hitting record levels in the previous session, as investors locked in gains and foreign funds continued trimming exposure. A mix of profit-taking and external pressures kept the benchmarks under strain.
The S&P BSE Sensex slipped 503.63 points, or 0.59%, to finish at 85,138.27, pulling back from Monday’s peak of 86,159.02. The NSE Nifty 50 dropped 143.55 points, or 0.55%, to 26,032.20. Both indices had surged to fresh 14-month highs on Monday, rising about 0.5% each, before late-session profit-taking dulled momentum and set a softer tone for Tuesday’s open.
Here are 5 factors that pulled the markets down:
1. Profit-taking after touching peaks
Equities extended their pullback on Tuesday, led by profit-taking in financials as the benchmark indices stalled near record highs for a fourth straight session.
The Nifty and Sensex hit fresh 14-month peaks on Monday, advancing roughly 0.5% each to 26,325.80 and 86,159.02, respectively, but were unable to hold the gains as investors booked profits.
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“Domestic markets continued to witness profit-booking amid concerns over the weakening rupee and persistent FII outflows. Meanwhile, the NSE’s sectoral index reshuffle in line with Securities and Exchange Board of India regulations triggered corrections in major banking stocks. In the near term, fading expectations of a Reserve Bank of India rate cut due to strong GDP data and uncertainty around US–India trade discussions may keep investors cautious. Still, robust domestic macro fundamentals and an improving earnings outlook for the second half of the fiscal year should provide support,” said Vinod Nair, Head of Research at Geojit Investments.
2. Rupee hits record low
The Indian rupee sank to a fresh record low on Tuesday, weighed down by sustained outflows and the absence of progress on a US–India trade agreement, factors that overshadowed otherwise strong domestic fundamentals. The slide prompted the central bank to step in to prevent the currency from breaching the 90-per-dollar mark.
The rupee was down 0.28% at 89.7975 per dollar, slipping past Monday’s record low of 89.7575. It briefly weakened to 89.85, close to a psychological threshold, before the Reserve Bank of India intervened to steady the currency.
3. Global stocks muted
Global markets were subdued on Tuesday as traders digested a cryptocurrency slump and a bond selloff fueled by expectations of a potential rate hike in Japan.
S&P 500 futures were steady after overnight losses on Wall Street, while Japanese government bonds stabilised following a strong auction, easing pressure after weeks of declines tied to concerns over the country’s fiscal outlook.
Bitcoin, considered a barometer of broader risk appetite, rebounded after a sharp 5.2% fall on Monday but at around $87,000 remains 30% below its October high.
MSCI’s broadest Asia-Pacific ex-Japan index edged up 0.3%, while Tokyo’s Nikkei added 0.1% after a steep decline on Monday.
South Korea’s Kospi led regional gains with a 1.6% rise, while China’s CSI300 fell 0.8%.
4. FII selling pressure
Foreign institutional investors continued offloading shares, selling equities worth a little over Rs 1,171 crore on December 1, while Domestic Institutional Investors (DIIs) stepped in as net buyers to the tune of Rs 2,559 crore.
In November, FIIs sold equities worth more than Rs 11,592 crore, reversing the net buying seen in October.
5. RBI policy caution weighs on banks
Banks and financial stocks were the biggest drags on Tuesday, driving a sharp slide in the benchmarks. Heavyweights HDFC Bank and ICICI Bank were among the top five losers as investors trimmed positions ahead of the Reserve Bank of India’s policy decision on Friday, with expectations of a possible December rate cut prompting traders to stay cautious.
"Bank Nifty closed Tuesday’s session forming a bearish candlestick near its 10-day SMA, reflecting selling pressure at higher levels. A negative RSI divergence, along with RSI slipping into bearish crossover, reinforces the short-term weakness in the index. Given the current setup, the index may drift lower to test its 20-day EMA around the 58800 mark. Immediate support lies at 59000, while positional support is placed at 58800, aligning with its 20-day SMA, and on the higher end, resistance remains firm near 60000 levels," said Vatsal Bhuva, Technical Analyst at LKP Securities.
(With inputs from agencies)
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(You can now subscribe to our ETMarkets WhatsApp channel)
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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