Profit Booking Weighs on Markets as Sensex Falls 550 Points, Nifty Slips Below 25,750

Markets Snap Six-Day Rally Amid Broad-Based Selling Sensex Falls 550 Points, Nifty Slips Below 25,750

After six consecutive sessions of gains, Indian equity benchmarks came under pressure on Friday, with investors resorting to profit booking amid renewed foreign investor outflows. The sentiment was further dampened by a lack of fresh triggers and rising market volatility.

At 1:45 p.m., the BSE Sensex was down 527.99 points, or 0.62 percent, at 84,028.41, while the NSE Nifty 50 slipped 158.40 points, or 0.61 percent, to 25,733.

The decline marks the first meaningful pullback in nearly a week, as traders chose to lock in gains from the recent rally. Despite global cues remaining largely stable, domestic factors such as profit booking in key sectors, renewed FII selling, and a rise in the India VIX weighed on sentiment.

Top Gainers and Losers: Mixed Performance Across Sectors

In an otherwise weak session, select metal and financial stocks managed to buck the trend. Hindalco Industries, Shriram Finance, and Oil & Natural Gas Corporation (ONGC) emerged as top gainers in the Nifty pack, rising up to 4 percent intraday on sector-specific buying.

On the flip side, Hindustan Unilever and Cipla were among the major laggards, losing as much as 3 percent, reflecting pressure in FMCG and pharma counters.

The broader markets also mirrored the weakness, with the Nifty Midcap 100 and Smallcap 100 indices slipping close to 0.5 percent each.

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1. Profit Booking After Six-Day Rally

The biggest factor behind Friday’s market correction was profit booking across major sectors including banking, financial services, FMCG, IT, and auto. Investors opted to take money off the table after a week-long rally that had pushed benchmark indices to record highs.

“The market rally, which began strongly yesterday on news of an imminent trade deal between India and the US, lost steam midway and completely fizzled out during the last hour,” said Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“The positive news regarding the trade deal was not confirmed by the Indian side, dampening the spirits of the bulls who couldn’t force further short covering,” he added.

2. Renewed FII Selling Pressures Markets

Another critical factor dragging markets lower was the return of Foreign Institutional Investors (FIIs) to the selling side. After five straight sessions of buying, FIIs sold equities worth ₹1,165.94 crore on Thursday, according to exchange data.

Analysts said this renewed selling trend reflects caution among overseas investors amid global uncertainties and mixed signals from the US Federal Reserve. The FII outflows also impacted large-cap stocks, particularly in the banking and technology sectors, which are heavily FII-owned.

3. India VIX Rises as Market Volatility Returns

The India VIX, which measures market volatility and investor sentiment, inched higher by nearly 1 percent to 11.84, indicating growing caution among traders.

Rising volatility typically signals uncertainty about short-term market direction and is often accompanied by profit booking or defensive positioning by institutional investors.

Market strategist Anand James, Chief Market Strategist at Geojit Financial Services, noted that Nifty may witness sideways movement initially with limited upside momentum.

“If dips are contained above 25,830–25,780, attempts to pull back towards 26,186 could emerge. A vertical rise is less expected. If pullback attempts fail to clear 26,000, downsides may resume, aiming for 25,590–25,400,” James said.

4. Sectoral and Technical Overview

Sectorally, Nifty Metal outperformed, driven by strong global aluminium and copper prices. On the other hand, Nifty FMCG and Nifty Pharma were among the top laggards, with investors booking profits in defensive sectors.

Technically, analysts said the Nifty 50 has key support at 25,600–25,400, while resistance is seen around 26,100–26,200. A sustained move below 25,700 could trigger further downside momentum, while holding above that level might encourage short-term recovery.

5. Global and Domestic Cues Remain Mixed

Globally, markets remained cautious ahead of key US economic data and the Federal Reserve’s policy meet next week. Domestically, investors await corporate earnings reports and any updates on trade developments between India and the US, which could influence sentiment in the coming sessions.

While economic fundamentals remain stable, the renewed volatility and foreign fund outflows suggest that the market’s short-term trajectory may remain choppy.

Near-Term Caution Likely, But Fundamentals Intact

Market experts believe the current dip should be viewed as a healthy correction after a strong rally. The broader uptrend in Indian equities remains supported by robust earnings growth, moderating inflation, and strong domestic inflows through mutual funds.

However, until clarity emerges on foreign investor flows and global rate cues, short-term volatility may persist.

“After a strong run-up, some consolidation was expected. Investors should use dips to accumulate quality large-cap stocks with solid fundamentals,” said a Mumbai-based fund manager.

Conclusion

Friday’s decline in the Sensex and Nifty reflects a natural pause in the market’s upward momentum. With profit booking, renewed FII selling, and rising volatility, investors are exercising caution. However, the broader market sentiment remains resilient, with analysts expecting sideways consolidation before the next leg of the rally resumes.

As the market digests global cues and domestic policy developments, the next few sessions will determine whether this is a brief correction or the beginning of a deeper consolidation phase.

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