Sensex Crashes 400 Pts from High; Nifty Volatile

The Indian benchmark equity indices witnessed a sharp reversal in momentum during the mid-session trade on Monday, with the S&P BSE Sensex shedding over 400 points from its daily peak to trade nearly flat. The NSE Nifty 50, similarly, retreated from its high, managing to hold above the psychological mark of 24,650 as market participants reacted to a mix of global cues and sector-specific selling pressure.

The indices had opened the day in the green, signaling a potential halt to the six-day losing streak that had characterised the end of the previous week. This initial optimism, driven by positive global markets and short-covering in battered stocks, pushed the Sensex and Nifty higher in early trade. However, the gains proved to be fleeting as profit-booking and heightened caution ahead of key domestic events triggered a slide.

Key Market Movers and Sectoral Drag

The sharp pullback in the afternoon session was largely attributed to profit-taking in stocks that had seen some recovery and continued weakness in specific sectors. Notably, the Media stocks were trading with significant cuts, contributing to the overall market volatility. The sector’s decline reflects continued investor apprehension, possibly related to underlying industry issues or a broad risk-off sentiment in the broader market.

While a few sectors like PSU Banks, Oil & Gas, and Realty initially showed resilience and strong buying interest, they were unable to sustain the benchmark indices in the green against the headwinds. The Nifty 50, after testing higher levels, was seen oscillating near the flat line, a testament to the indecisive nature of the market.

Crucial Week Ahead

Investor sentiment remains guarded, with market focus shifting to crucial domestic factors this week. The upcoming Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) announcement is a major event on the calendar, with most analysts expecting the central bank to hold the key repo rate unchanged. Market participants will be closely watching the RBI’s commentary for insights into its growth and inflation outlook, which could dictate the near-term trajectory of interest-rate sensitive sectors.

Furthermore, the expiry of the September derivatives series is also adding to the intra-day choppiness, often leading to increased volatility as traders roll over their positions.

Global and Technical Picture

Globally, the mood remained mixed, providing limited direction. While Asian markets largely traded higher following a bounce-back in US equities on Friday, domestic concerns appeared to be dominating the trading floor.

Technically, market experts suggest that the recent sustained downtrend, which had previously pulled the Nifty below key support levels, indicates underlying weakness. While the current session saw a brief bounce, analysts caution that for a sustainable rally to take hold, the market needs fresh, positive triggers, particularly concerning the ongoing geopolitical and trade rhetoric, which has been a major overhang recently. The immediate support levels for the Nifty are now being keenly watched to assess whether the market is heading for further consolidation or a deeper correction.

In this environment of high volatility and mixed signals, stock-specific movements and adherence to strict risk management remain paramount for investors.