Markets Tumble Again: Is This Just a Healthy Pullback or Something Deeper?

The Indian stock market faced yet another round of selling pressure on Tuesday, marking the third consecutive session of losses. Both the Sensex and Nifty fell over 1%, raising a critical question in investors’ minds — is this a healthy pullback after a strong rally, or are the markets heading into a deeper correction phase?

On Tuesday, the Sensex dropped 872.98 points or 1.06% to close at 81,186.44, despite opening on a positive note. It quickly reversed gains and touched an intraday low of 81,153.70. Only three out of the 30 Sensex stocks ended in the green, with auto, financial, and defence stocks leading the decline.

The Nifty 50 index also slipped sharply, ending the day 261.55 points or 1.05% lower at 24,683.90. With this fall, both benchmark indices have now declined for three straight trading sessions, a sign that market sentiment is turning cautious.

What Triggered the Fall? Experts Weigh In

According to Devarsh Vakil, Head of Prime Research at HDFC Securities, a mix of domestic and global factors contributed to Tuesday’s decline. “Markets were spooked by rising Covid-19 cases in Southeast Asian countries like Singapore and Hong Kong. Simultaneously, global bond yields have risen, especially in Japan, increasing borrowing costs and dampening global sentiment,” Vakil explained.

He also noted that uncertainty around the India-U.S. trade discussions added to the cautious mood in the markets.

Key Technical Levels to Watch

From a technical standpoint, experts believe the Nifty could be entering a consolidation or correction phase.

“Nifty has closed below its 5-day Exponential Moving Average (EMA) for the first time since May 8,” said Vakil. “This signals a shift in trader behavior — from buying the dips to booking profits. Now, important support levels lie at 24,494 and 24,378, while resistance is likely between 24,800 and 24,900.”

Analysts at Bajaj Broking also echoed a similar view. They pointed out that the Nifty has formed a bearish candle on the daily chart with a lower high–lower low pattern, which indicates further weakness.

“The index may now enter a sideways consolidation phase between 24,400 and 25,200, helping cool off overbought conditions seen on the daily stochastic oscillator after the recent sharp rally,” Bajaj Broking mentioned in their note.

Crucial Support Zones Ahead

Market watchers are now keeping a close eye on the 24,350–24,400 zone, as this area aligns with the previous week’s low, the 20-day EMA, and the 61.8% Fibonacci retracement level of the recent uptrend from 23,935 to 25,116.

What Should Investors Do Now?

While some may see the current decline as a normal market correction after a strong rally, others are turning cautious amid rising global uncertainty and technical breakdowns. For now, investors are advised to watch support and resistance levels closely, avoid aggressive positions, and stay alert to further global developments — especially around Covid-19 trends and bond market signals.