The Indian stock market snapped a two-session gaining streak to close in the deep red on Monday, with Sensex and Nifty falling up to 0.5% as fresh escalations in the conflict between Iran and US in the Middle East spooked investors.
Sensex fell over 372 points to close at 76,728 while Nifty 50 declined 110 points to end the session at 23,946. This came as the quarterly index rebalancing of several NSE indices took effect today.
Broader markets also closed in the deep red, with Nifty Smallcap 100 and Nifty Midcap 100 indices falling up to 0.6%. Sectorally, Nifty Auto tumbled over 2% to lead losses, while Nifty Pharma gained more than 1%. Around 1,330 stocks advanced on the NSE, while 2,036 declined and 104 remained unchanged.
What lies ahead?
Profit booking persisted near key psychological levels as investors remained cautious about the sustainability of the interim US–Iran peace agreement, said Vinod Nair, Head of Research, Geojit Investments. “The market currently lacks clear near-term direction, with expectations for the Q1FY27 earnings season remaining subdued amid supply constraints, persistent inflationary pressures, and a weak monsoon outlook, all of which are likely to weigh on margins,” he added.
The analyst noted that selling was broad-based; however, defensive sectors such as pharma and healthcare outperformed, supported by their inelastic demand profile and earnings visibility. “Investors also remain cautious ahead of the upcoming U.S. nonfarm payrolls data, which could influence the Fed's policy trajectory and either reinforce or temper prevailing expectations of further rate hikes. A moderation in FII outflows in the domestic market, coupled with a normalisation of the global AI-driven market exuberance, could act as incremental triggers for improved market sentiment going forward,” he added.
The Nifty started the week on a weak note and remained under pressure throughout, as the index slipped below the 50EMA on the hourly chart, said Rupak De, Senior Technical Analyst at LKP Securities. He noted that the momentum indicator also remained weak, with the RSI in a bearish crossover, indicating subdued near-term sentiment.
“Volatility may remain elevated in the very near term due to the NSE monthly expiry on Tuesday. However, the short-term trend remains constructive as long as the index holds above the 23,800 support level. Unless the Nifty falls below 23,800, a buy-on-dips strategy should be maintained. On the higher end, 24,200 is likely to continue acting as the immediate resistance,” according to the analyst.
