Sensex settles 250 pts lower, Nifty below 25,750; what’s next for stock market?

Domestic equity benchmarks Sensex and Nifty resumed their downward trajectory on Tuesday, ending the session in the red after a brief pause on the previous trading day. Investor sentiment turned cautious amid a mix of global uncertainties, budget-related concerns and profit-booking in heavyweight stocks such as Trent, L&T and Reliance Industries, which dragged the indices lower.

At close, the Sensex dropped 250.48 points, or 0.30 per cent, to settle at 83,627.69. The Nifty declined 57.95 points, or 0.22 per cent, to end at 25,732.30.

Ponmudi R, CEO of Enrich Money, a SEBI - registered online trading and wealth tech firm, said the 50-pack index formed a red candle with a long upper shadow, signalling selling pressure and a clear rejection near the 25,900 resistance zone. He added that this level is marked by heavy call open interest, indicating strong supply and limiting further upside in the near term.

Trent emerged as top loser on the Sensex, falling 3.67% to Rs 3908.45. L&T followed with a 3.23% drop, while IndiGo, Reliance Industries, Maruti Suzuki, and ITC declined 2.10%, 1.77%, 1.13% and 1.05%, respectively. 

Five stocks, namely Reliance Indsutries (RIL), Larsen & Toubro, Bharti Airtel, ITC and Trent, contributed heavily to the Sensex’s fall.      

In the Sensex index, shares of Trent and ITC hit a fresh 52-week low of Rs 3,830.55 and Rs 333.80, respectively.

Among sectoral indices, the BSE Energy index fell 0.51% to close at 11,789.15, while the BSE Industrials declined 1.09% to settle at 14,138.04.

Overall, of the 4,327 actively traded BSE stocks, 2,052 closed higher, 2,086 declined, and 189 remained unchanged. During the session, 69 stocks touched their 52-week highs, while 232 fell to 52-week lows. Meanwhile, 169 scrips hit their upper circuits, and 185 were locked in lower circuits.

Ponmudi R said the index’s inability to sustain higher levels indicates persistent overhead supply. However, he noted that the benchmark managed to defend the crucial 25,600–25,650 support zone, which coincides with the 100-day exponential moving average (EMA) and the previous reversal base. This helped prevent a deeper correction and allowed the index to stage a modest recovery above the 25,700 mark.

According to Ponmudi R, immediate support is placed at 25,650–25,600, and a sustained breach below this zone could intensify selling pressure and drag the index towards 25,500. On the upside, resistance is seen in the 25,800–25,900 band, followed by a stronger hurdle at 25,950–26,000. “A decisive close above this range would be required to open up further upside towards 26,100 and higher,” he added.

Meanwhile, Vinod Nair, Head of Research, Geojit Investments Limited, said domestic equities experienced a downturn due to renewed concerns about potential US tariffs on countries trading with Iran, overshadowing the initial optimism from the newly appointed U.S. ambassador's positive statements on the trade deal. 

“Investor sentiment remained cautious amidst the rupee's weakness, rising crude prices, higher U.S. bond yields, and persistent FII outflows. On a brighter note, India’s December CPI remained within the RBI’s target range, reinforcing expectations of future rate cuts. However, the Q3 earnings season commenced on a subdued note, with lackluster results from a leading IT major. Profit booking was prevalent across most sectors, though small-cap stocks showed notable gains," Nair said.