Sensex Falls 400 Points, Nifty Near 26,050 as Banking Heavyweights Drag Markets Lower

The Indian equity market extended its weakness into the third straight session on Tuesday, as the combined impact of a record-low rupee, continued foreign fund outflows, and profit-booking in heavyweight private bank stocks pulled benchmark indices sharply lower.

The Sensex slipped 427 points, or 0.49%, to an intraday low of 85,215.12, giving up gains from the previous session where it hit an all-time high. The Nifty50 also fell 129 points, or 0.49%, to 26,046.85, moving closer to the 26,000 mark as selling intensified across key sectors.

This decline comes a day after both indices had touched record levels but later failed to sustain momentum. On Monday, the Sensex closed 64.77 points lower at 85,641.90, despite hitting a fresh intraday high of 86,159.02. The Nifty closed at 26,175.75, after touching its own lifetime peak of 26,325.80 during the session.

Major Movers: Banks Fall, Pharma and Paint Stocks Gain

Among the Nifty50’s major laggards, heavyweights such as ICICI Bank, HDFC Life Insurance Company, and InterGlobe Aviation declined up to 2%, contributing significantly to the weaker market tone.

On the other hand, select defensives provided some support. Dr. Reddy’s Laboratories and Asian Paints emerged as the top gainers, rising up to 1% and helping limit the downside in an otherwise weak market.

Key Factors Behind the Market Decline

The market’s fall was attributed to four primary triggers, all of which together weakened investor sentiment despite strong domestic fundamentals.

1) Rupee Slides to a Record Low

The Indian rupee opened lower at 89.70 per dollar, and later slipped further to hit a record low of 89.85, down 32 paise from the previous close.

Traders attributed this sharp decline to:

• Strong dollar demand from corporates and importers

• Continued buying pressure from foreign portfolio investors (FPIs)

• Elevated crude oil prices, which tend to increase India’s import bill

A falling rupee typically raises concerns around inflation and foreign investor confidence, impacting equity market flows.

2) Persistent FII Outflows Pressure the Markets

Foreign Institutional Investors (FIIs) continued to exit Indian equities. On Monday alone, they sold ₹1,171.31 crore worth of shares, marking the third consecutive session of outflows this month.

Frequent FII selling often signals weakening risk appetite and can weigh heavily on benchmark indices.

Market experts told Reuters:

• Osho Krishan, Chief Manager of Technical & Derivative Research at Angel One, said the lack of sustained buying interest near record highs for four sessions indicates a pause in market momentum.

• Nilesh Jain, Head of Technical & Derivatives Research at Centrum Broking, added that investors seem unwilling to chase the market at elevated levels and are waiting for a meaningful pullback before taking fresh positions.

3) Weak Global Cues Add to Selling Pressure

Cautious sentiment across global markets further dampened domestic risk appetite. Key Asian indices, including Shanghai’s SSE Composite, traded lower. Meanwhile, US markets closed Monday’s session in the red, signalling risk aversion among global investors.

These weak global cues contributed to the broader selling seen across sectors in India.

4) Private Bank Stocks Lead the Decline

The Nifty Private Bank index fell up to 0.4%, driven by declines in major heavyweights such as HDFC Bank and ICICI Bank.

Banks reacted to the revised Nifty Bank weight changes, which led to profit-booking in some of the most widely held stocks in the index.

Private banks hold large index weights, so even moderate selling in these stocks tends to have a significant impact on both the Sensex and Nifty.

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Technical View: Key Levels to Watch

According to Anand James, Chief Market Strategist at Geojit Financial Services, the previous session showed muted momentum, with buyers stepping back and allowing the index to drift lower.

He noted:

• Bulls may attempt a comeback if the Nifty re-enters the 26,110–26,060 zone.

• If the index fails to hold this range, it could open the door to 25,860–25,700, or even 25,300.

• However, he added that such a sharp decline appeared less likely on Tuesday.

This suggests that while short-term volatility may persist, traders will closely monitor whether the index can hold key support zones.

Conclusion

With the rupee hitting a record low, sustained FII selling, weak global markets, and heavyweight banking stocks under pressure, the Indian market faced broad-based weakness on Tuesday.

The decline comes after both the Sensex and Nifty touched record highs in the previous session, highlighting the increasing caution among investors at elevated levels.

Market participants will now watch whether domestic cues stabilize and if the Nifty can reclaim crucial support zones in the coming sessions.

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