Sensex, Nifty close in the red: Why markets fell and what to expect next

Indian equity benchmarks ended lower on Monday, weighed down by losses in information technology (IT), automobile, banking and energy stocks. The 30-share BSE Sensex pack dropped 372.10 points or 0.48 per cent to settle at 76,728.37, while the NSE Nifty50 index declined 109.75 points or 0.46 per cent to close at 23,946.25.

The broader market also finished in negative territory, with Nifty Midcap100 falling 0.37 per cent and Nifty Smallcap100 declining 0.62 per cent.

Major drags on the Sensex included Reliance Industries Ltd (RIL), Kotak Mahindra Bank Ltd, Mahindra & Mahindra Ltd (M&M), Larsen & Toubro Ltd (L&T), Axis Bank Ltd, Maruti Suzuki India Ltd, State Bank of India (SBI), InterGlobe Aviation Ltd (IndiGo's parent) and Hindustan Unilever Ltd (HUL).

Ankur Punj, MD & Business Head at Equirus Wealth, said, "The geopolitical environment remains fragile as both the US and Iran continue limited conflict, keeping markets on the edge and unsettling investors. A rise in crude oil prices and the depreciating rupee against the dollar triggered selling in IT, banking and oil & gas stocks. Focus will soon shift to first-quarter earnings over the next couple of weeks, concentrating mainly on IT, banking and FMCG companies amid the weak monsoon so far and the impact of rising crude oil on these companies."

Ajit Mishra – SVP (Research) at Religare Broking, stated, "The market traded on a subdued note, with benchmark indices ending lower amid mixed global cues and profit booking in select heavyweight counters. After a steady start, the Nifty traded within a narrow range for most of the session. However, persistent selling in heavyweight stocks across sectors kept the undertone negative throughout the day."

He added, "Sectoral participation remained mixed, with IT and auto emerging as the key laggards, while metal and pharma stocks displayed relative resilience. Broader markets largely mirrored the benchmark's performance, reflecting a cautious undertone." 

Mishra further said, "Investor sentiment remained cautious as participants balanced optimism surrounding the ongoing US-Iran diplomatic talks against renewed geopolitical risks in the Middle East following fresh military developments over the weekend. Stock-specific developments also dominated the session, with weakness in the IT pack following acquisition-related concerns, while leadership-related developments in select banking names further weighed on the benchmark indices."

What's ahead?

Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd (MOFSL), expects Indian equities to remain cautiously optimistic amid renewed geopolitical tensions in West Asia.

"Market participants will closely monitor the US-Iran negotiations in Qatar, with initial discussions centred on ensuring safe navigation through the Strait of Hormuz. Until there is greater clarity on the durability of the ceasefire, geopolitical developments are expected to remain a key driver of global sentiment. Against this backdrop, investors are expected to favour defensive sectors such as Pharmaceuticals, Healthcare, FMCG and Financials, while oil-sensitive sectors including OMCs and Aviation could benefit from lower crude oil prices," he stated.

He noted that the progress of the southwest monsoon will also remain a key monitorable, with implications for food inflation and rural demand.

Nifty outlook

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said, "The short-term trend of Nifty has turned weak with range-bound action. There is a possibility of more choppy movements in the next 1-2 sessions before bouncing back again from the lows. The next lower support to be watched is at 23,800, and immediate resistance is placed at 24,250."