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
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.
“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.
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.
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
South Korea’s Kospi led regional gains with a 1.6% rise, while China’s CSI300 fell 0.8%.
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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