End of 7-day rally? Here is why Sensex, Nifty fell in early trade today

Indian stock market indices Sensex and Nifty slumped in early Thursday trade despite coming off a seven-day rally, as a muted Asian market trend crept in. Over the past seven trading days, Sensex gained 8.48 per cent and Nifty soared by 8.61 per cent amid healthy fund inflows from foreign institutional investors (FIIs).

On Wednesday, FIIs bought ₹3,332.93 crore worth of equities in Indian markets, adding to the rally.  Sensex soared 520.90 points to close at 80,116.49 on Wednesday—the highest ever level since the year began. However, the trend seems to have flipped on Thursday morning.

In morning trade, the 30-pack Sensex shed almost 242 points while the NSE Nifty lost at least 72 points. The losses from Airtel, ICICI Bank, Mahindra and Mahindra, HCL Tech, Reliance Industries, and HDFC Bank weighed on the Sensex, offsetting the gains led by IndusInd Bank, Tech Mahindra, Nestle, Bajaj Finance, Axis Bank, and Tata Motors.

Other markets in the continent faced similar fates, with South Korea’s Kospi index, Shanghai SSE Composite, and Hong Kong’s Hang Seng indices trading lower during the day. Only Japan’s Nikkei 225 was trading in the green, among major markets in Asia.

On Wednesday, US markets ended positive—the Nasdaq Composite was up 2.50 per cent, the S&P 500 rose 1.67 per cent, and the Dow Jones Industrial Average increased by 1.07 per cent.

The Indian currency was also weighed down by the change in sentiment for domestic equities, with the rupee slipping 22 paise to 85.67 against the US dollar in early trade.

Experts and market watchers state that the fresh uncertainty due to geopolitical tensions, following the terror attack in Pahalgam, lifted the perception of risk. The US dollar’s recovery around hopes of a potential understanding with China added to the battering of the rupee.

CR Forex Advisors MD Amit Pabari highlighted historic patterns. “During the 2016 Uri and 2019 Pulwama attacks, the rupee weakened initially but rebounded following decisive Indian responses, underscoring that investor confidence hinges on India’s strategic stance post-incident,” added Pabari.

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