Investors lose Rs 7 lakh crore as Sensex, Nifty resume downtrend; what's next?

Domestic equity benchmarks Sensex and Nifty slipped back into negative territory on Friday after a brief respite a day earlier, pressured by sustained foreign fund outflows amid mixed global cues. Broad-based selling weighed on sentiment, with all sectoral indices ending the session in the red.

At close, the Sensex declined 769.67 points, or 0.94 per cent, to settle at 81,537.70. The Nifty dropped 241.25 points, or 0.95 per cent, to close at 25,048.65. 

The 50-pack index slipped into a clear intraday downtrend, characterized by a classic bearish sequence of lower highs and lower lows, said Ponmudi R, CEO of Enrich Money. Adding, the index has retreated back below its 200-day Exponential Moving Average (EMA), a development that reinforces the prevailing negative bias in the market structure.

The domestic indices suffered a steep decline, erasing around Rs 6.72 lakh crore in BSE market capitalisation. Investor wealth, as reflected in the BSE’s market cap, fell to Rs 451.70 lakh crore, down from Rs 458.42 lakh crore recorded in the previous session.

Domestic equity markets sold off despite an optimistic global market and supportive domestic PMI data, said Vinod Nair, Head of Research at Geojit Investments Limited.

Adani Ports & Special Economic Zone emerged as top loser on the Sensex, falling 7.52% to Rs 1307.60. Eternal followed with a 6.29% drop, while IndiGo, Axis Bank, Bajaj Finserv and Power Grid fell 4.01%, 2.72%, 2.26% and 2.08%, respectively. 

Five stocks, namely Axis Bank, Eternal, Reliance Industries, State Bank of India (SBI) and Adani Ports, contributed heavily to the Sensex’s decline.    

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Among sectoral indices, the BSE PSU Bank index fell 2.37% to close at 4,968.81, while the BSE Realty declined 3.35% to settle at 5,895.17.

In the BSE 100 index, shares of Adani Enterprises, Cipla, DLF, Havells India and Tube Investments of India hit their fresh 52-week low.

Market breadth remained firmly negative on the BSE. Of the 4,361 actively traded stocks, 1,333 ended in the green, while a dominant 2,877 declined and 151 settled unchanged. The session saw 75 stocks scaling fresh 52-week highs, compared with 409 counters sliding to new 52-week lows. In addition, 169 scrips were locked at their upper circuits, whereas 187 hit lower circuit limits.

Nair said sentiment was weighed down by rising crude oil prices, the rupee's sharp depreciation to record lows, FIIs selling, and earnings delivery falling slightly short of expectations amid premium India valuations. 

“Realty and PSU bank stocks underperformed on execution-related delays and profit booking, while Adani Group stocks came under pressure amid reports of potential summons by the US regulator. Looking ahead, market sentiment is likely to remain cautious as investors position to upcoming the Union Budget and the US Fed’s interest rate decision where expectations are muted," Nair added.

Technical levels are now strictly defined, with the psychological mark of 25,000 serving as the critical near-term support. Ponmudi R warned that a decisive breakdown below this threshold could trigger accelerated selling, potentially dragging the index down toward the 24,900–24,800 region. Conversely, any attempted recovery faces a stiff supply band between 25,200 and 25,300, with the 25,400 level identified as the crucial threshold required for a trend reversal, he said.