Sensex Falls 610 Points and Nifty Drops Below 26,000 as Markets Break Two-Day Rally

Markets Reverse Two-Day Rally as Sensex Drops 610 Points and Nifty Slips Below 26,000 Amid Global Caution

Index	Price	Change	% Chg
Nifty 50	25,960.55	225.90	-0.86%
Nifty Bank	59,238.55	538.65	-0.90%
Nifty Financial	27,687.15	194.75	-0.70%
BSE SENSEX	85,102.69	609.68	-0.71%

The Indian equity markets opened the week on a weak footing as benchmark indices Sensex and Nifty sharply reversed their two-day winning streak, dragged down by sweeping profit booking across midcap and smallcap stocks and renewed selling pressure from foreign investors. The broader mood remained risk-averse as traders braced for the US Federal Reserve’s policy decision scheduled midweek, prompting caution across global markets.

The S&P BSE Sensex fell 610 points, or 0.71%, to finish at 85,102.69, while the NSE Nifty 50 declined 226 points, or 0.86%, closing at 25,960.55, slipping decisively below the psychological 26,000 mark. The losses deepened earlier intraday as the Nifty slid nearly 1%, with the decline extending across most sectors including realty, media, metals, and consumer durables. The Bank Nifty also ended lower by 0.90%, closing at 59,238.55, reflecting weakness in rate-sensitive financial counters.

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Profit Booking and FII Selling Drag Markets Lower as Broader Indices Witness Sharp Declines

The negative sentiment was most visible in the broader markets, where selling pressure intensified. The BSE Midcap index fell 1.7%, while the Smallcap index tumbled 2.2%, continuing their recent pattern of underperformance. Analysts noted that valuations in several pockets had turned stretched, making them vulnerable to global risk-off triggers and liquidity tightening.

The market opened with modest losses but quickly extended its downward trajectory as profit booking accelerated. Though some intraday recovery emerged in the final trading hour, it wasn’t enough to offset the broader sell-off. By the close, declines were broad-based, capturing both frontline stocks and the more volatile mid and small-cap segments.

Tech Mahindra Tops Gainers While Indigo, BEL, JSW Steel and Nestle Lead the Declines

In a session dominated by red, very few stocks managed to end with gains. Tech Mahindra (+1.22%), Wipro (+0.35%), and HCLTech (+0.12%) were the only Nifty 50 constituents that closed in positive territory. On the other hand, InterGlobe Aviation (IndiGo) emerged as the biggest laggard, plunging 8.62% amid ongoing operational disruptions and regulator scrutiny. Bharat Electronics (BEL) slipped 4.92%, JSW Steel dropped 3.71%, while Nestle India and Shriram Finance fell 2.56% and 2.52%, respectively.

At the sectoral level, the picture was uniformly negative. Realty stocks declined the most, falling nearly 3.53%, followed by Media (-2.73%), PSU banks, Telecom, Metals (-1.92%), Consumer Durables (-1.54%), and Pharma (-1.34%). No sectoral index ended in the green, underscoring the breadth of the correction.

Stock-Specific Movements Add to Market Volatility as Block Deals and Corporate Actions Drive Sharp Moves

Several individual stocks saw pronounced action driven by block deals, corporate developments, and operational updates. Eternal shares declined 2.5% after 52.06 million shares (0.5% equity) changed hands in a large block trade. SPML Infra fell 3.5% despite securing a ₹207.38 crore project, as profit taking overshadowed the positive news.

Biocon declined nearly 2% on the announcement that the company will integrate Biocon Biologics as a subsidiary, acquiring remaining stake. Lenskart Solutions dropped 2% following the expiry of a shareholder lock-in period. HFCL shed 3.6% despite bagging export orders worth $72.96 million.

However, a few stocks bucked the trend. Ashoka Buildcon rose 1% after winning an additional work order from BMC. Dynamatic Technologies surged 6% following a strategic agreement with Dassault Aviation, and SML Mahindra gained nearly 3% supported by robust November CV sales, which jumped 94% year-on-year.

Technical Indicators Turn Bearish as Nifty Breaks Key Support Levels and RSI Weakens

From a technical viewpoint, the Nifty’s fall below the 26,000 support zone and its first close below the 21-day EMA in weeks signals weakening momentum. Analysts observed that the RSI has turned into a bearish crossover, indicating continued downside risks. The index also logged its lowest closing in nine days, with a rise in India VIX, the volatility index, further dampening short-term sentiment.

The near-term outlook remains cautious. The Nifty could drift toward 25,730 if selling persists, while 26,000–26,100 now act as immediate resistance. For a sustainable recovery to resume, analysts say the index must close convincingly above 26,200.

Global and Macro Triggers Weigh on Sentiment as Investors Brace for Fed Decision

Market mood remained cautious ahead of the US Federal Reserve’s two-day meeting beginning December 9, where investors expect commentary around global economic conditions and the timing of future rate cuts. “Investors positioned cautiously ahead of the upcoming FOMC meeting, additional inflation releases, and year-end portfolio adjustments,” said Devarsh Vakil, Head of Prime Research, HDFC Securities.

Other central banks — including those in Australia, Brazil, Canada and Switzerland — are also scheduled to meet this week, though no major policy shifts are expected outside the Fed. However, persistent foreign institutional investor (FII) outflows weighed on domestic sentiment, with FIIs selling ₹438.90 crore worth of equities on Friday, marking the seventh consecutive day of net selling.

According to Siddharth Maurya, Founder & MD, Vibhavangal Anukulakara, “The fall is mainly due to a nervous worldwide atmosphere… valuations had become stretched, making the indices more vulnerable to negative cues. The force of the fall in midcap and smallcap segments is greater.”

Rupee Weakens, Crude Edges Up, and VIX Climbs as Macro Pressures Add to Risk-Off Mood

The rupee closed at 90.09, down 14 paise, pressured by higher crude prices and continued foreign fund withdrawals. Brent crude inched up to $63.83 per barrel, stoking inflation and import bill concerns.

Meanwhile, the India VIX surged 7.85%, closing at 11.13, indicating rising uncertainty across markets.

Market Breadth Weakens Sharply as Decliners Outnumber Advancers

Market breadth remained extremely weak on Monday, reflecting the broad-based selling pressure across sectors. Only 580 stocks advanced, while a staggering 2,580 shares declined, highlighting the intensity of the market-wide correction. The number of stocks hitting 52-week lows surged to 429, far outpacing the 41 stocks that managed to touch new 52-week highs, signalling deteriorating sentiment in the broader market. Additionally, 138 stocks hit their lower price band, compared to 69 upper-band hitters, underscoring the dominant bearish undertone and heightened volatility across the trading session.

Global Markets Stay Mixed While Mutual Fund SIP Returns Shine and New IPOs Emerge

Globally, the Stoxx Europe 600 remained flat, while S&P 500 futures rose 0.1% and Nasdaq 100 futures gained 0.2%. Asian markets were marginally positive, with the MSCI Asia Pacific Index up 0.2%.

Back home, investor interest in mutual funds continued to rise. An ETMutualFunds analysis showed 20 equity mutual funds delivered over 20% SIP XIRR returns over the last five years, underscoring strong retail participation.

On the IPO front, Neptune Logitek announced plans to raise ₹46.62 crore via a public issue opening December 15, with proceeds targeted toward fleet expansion, debt repayment and operational growth.

As Markets Face Fed Week Volatility, Analysts Advise Caution and Selective Stock Picking

With the US Federal Reserve’s policy decision just days away, analysts expect heightened volatility across global and domestic markets, prompting them to recommend a cautious and selective approach. Concerns over delayed rate cuts, a weak rupee, elevated crude prices and persistent FII outflows are likely to keep sentiment fragile in the near term. Experts advise focusing on quality large caps and defensives, while avoiding aggressive bets in overheated midcap and smallcap pockets. Until clearer signals emerge from the Fed, analysts believe stock selection and disciplined risk management will be crucial for navigating the market’s uncertain short-term trajectory.

• Nifty 50
• Bank Nifty
• Sensex

FAQs Sensex Falls 610 Points and Nifty Drops Below 26,000

Why did the Sensex fall 610 points and Nifty slip below 26,000 today despite strong domestic fundamentals?

The Sensex and Nifty declined due to profit booking after a two-day rally, rising global uncertainty ahead of the US Federal Reserve meeting, persistent foreign institutional investor (FII) outflows, and pressure on midcap and smallcap stocks. Weakness in the rupee and higher crude oil prices further dampened risk appetite, contributing to the sharp pullback.

How do FII outflows and global rate uncertainty influence Indian equity markets in the short term?

FII outflows put direct pressure on liquidity and often trigger volatility in large-cap and high-beta sectors. During periods of global rate uncertainty—such as ahead of a key Fed decision—FIIs tend to adopt a risk-off stance, pulling money out of emerging markets like India, which can intensify selling in equities and weaken the currency.

What does the rise in India VIX indicate and how should investors interpret elevated volatility levels?

A rise in India VIX signals higher expected volatility in the near future, often reflecting investor nervousness. An uptick in VIX typically leads traders to reduce risk exposure, avoid leveraged positions, and shift towards defensive or large-cap stocks until market stability improves.

Why did midcap and smallcap stocks fall more sharply than frontline indices in today’s market correction?

Midcap and smallcap stocks have rallied significantly in recent months, leading to stretched valuations. During times of global uncertainty and liquidity tightening, these segments tend to correct more sharply. Additionally, profit booking, unwinding of leveraged positions and sector-specific unwinding in themes like defence, renewables and industrials intensified the downside pressure.

What technical levels should traders watch for Nifty in the coming sessions amid increasing volatility?

Nifty has slipped below its 21-day EMA and key support near 26,000. Analysts highlight 25,800 as the next critical support; a close below this level may trigger deeper consolidation toward 25,500–25,650. On the upside, the index needs a sustained move above 26,200 to regain strength and attract meaningful buying interest.

Which sectors are expected to remain resilient when markets turn volatile ahead of major global events like the Fed meeting?

Defensive sectors such as FMCG, pharmaceuticals, utilities, and large-cap IT generally withstand volatility better due to stable earnings visibility. In the current environment, analysts also favor quality private banks and select auto names with strong fundamentals, while advising caution in overheated midcap pockets and high-beta cyclical sectors.

How should retail investors navigate short-term corrections triggered by global policy events like the Federal Reserve meeting?

Retail investors are advised to stay disciplined, avoid panic selling, and focus on gradually accumulating high-quality large caps. Experts recommend keeping leveraged positions low, maintaining adequate liquidity, and aligning portfolios toward businesses with strong cash flows and minimal debt. Short-term volatility around global policy announcements is common, but long-term investors should remain focused on fundamentals.