Market extends fall: Why Sensex, Nifty slipped today?

Indian equity benchmarks resumed fall on Wednesday, extending their fall for the third consecutive session as profit booking continued at higher levels. Investors also remained cautious amid persistent foreign outflows. The BSE Sensex pack slumped over 550 points from the day's high level while the NSE barometer Nifty slipped more than 150 points to hit the sub-24,450 level. The 30-pack Sensex eventually settled 139 points or 0.17 per cent at 80,082. The NSE benchmark finished 37 points or 0.15 per cent lower at 24,436. Frontline stocks such as ICICI Bank, Mahindra & Mahindra, L&T, Sun Pharma, Axis Bank, NTPC, Reliance Industries Ltd (RIL), PowerGrid, State Bank of India (SBI) and Adani Ports contributed to the fall today.

Foreign outflows from domestic equities continued for the 17th straight session on Tuesday, as investors redirected funds to China on the recently announced stimulus measures and relatively cheaper valuations.

Here are the key factors behind today's market fall:

Sell-on-rise

The 'sell-on-rise' strategy is working for domestic benchmarks, given their stellar run-up in the recent past, said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities. From a longer-term perspective, the Indian market is a 'buy-on-dip' market, the analyst added.

The market faced volatility today as yesterday's decline prompted further profit-taking, bringing bears back into focus, said Prashanth Tapse, Senior VP (Research), Mehta Equities.

Crude prices

Crude oil prices are expected to fluctuate in the coming years, with a potential rise to $80 per barrel in the last quarter of 2024, before dipping to the low $60s by the end of 2025, according to a report by JP Morgan. Brent crude slipped today but stayed well above the $75 per barrel mark amid escalating tensions in the Middle East, with Israel poised to retaliate against Iran.

Brent crude futures eased 65 cents, or 0.85 per cent, to $75.39 a barrel. US West Texas Intermediate crude futures shed 66 cents, or 0.92 per cent, to $71.08 a barrel.

According to a report by JP Morgan, crude prices are expected to fluctuate in the coming years, with a potential rise to $80 per barrel in the last quarter of 2024, before dipping to the low $60s by the end of 2025.

FII selling

Heavy selling by foreign institutional investors (FIIs) outshined all records in October, offloading the highest-ever shares in one month. FIIs sold Rs 3,978.61 crore of shares on a net basis in the previous session, while domestic institutional investors (DIIs) purchased Rs 5,869.06 crore of stocks, exchange data showed.

"The ongoing trend of large-caps outperforming mid and small-caps is likely to sustain. FII selling and the countervailing trend of DII buying are likely to continue. Investors need not rush to buy the beaten down mid and small-caps since there is more pain left in this segment where valuations continue to remain very high," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Nifty outlook

Looking ahead, the 24,650–24,850 range can be considered a potential selling zone as long as the index stays below 25,000. On the downside, the 24,400 level serves as critical support, and a sustained break below this level could trigger further selling, potentially driving the market toward the 24,200–24,000 range. Traders are advised to remain cautious, stick to strict stop-loss levels, and avoid holding long positions overnight to mitigate risk in this volatile environment," said Hardik Matalia, Derivative Analyst at Choice Broking.