Sensex declines 550 pts from day’s high, Nifty below 24,100: Four key reasons behind sharp market fall
Key reasons behind markets paring gains
1) Profit booking
Markets saw gap-up opening as Brent crude dropped to $108 a barrel from about $115 earlier this week, after Trump said he would pause “Project Freedom”, an operation to help escort ships through the Strait of Hormuz, citing “great progress” toward a comprehensive agreement with Iran.
However, the markets saw profit booking as Tehran has not reacted to Trump’s comments on the negotiations yet.
Meanwhile, an analyst said “declarations by leaders of US and Iran, particularly by President Trump, had lost all credibility”.
“Since the war began the market has been moving up and down in response to news from the war front and fluctuations in the price of crude. Declarations by leaders of US and Iran, particularly by President Trump, had lost all credibility due to their notorious inconsistency. Therefore, the market will be careful while responding to the latest declaration by Secretary of State Marco Rubio that “operation Epic Fury is concluded”. The crude market has responded positively to the declaration with Brent declining to around $108,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
2) FII selling
Foreign investors resumed selling again as foreign portfolio investors (FPI) sold domestic stocks worth Rs 3,622 crore on a net basis on Tuesday, while domestic institutional investors (DII) bought Rs 2,603 crore worth of stocks.
3) Technical Reason
Analysts said Nifty has to decisively cross 24,250 for further upside in the markets.
“On the downside, 23,800–23,750 (0.382 Fib) remains a strong demand zone, where consistent buying interest is emerging, keeping the broader structure range-bound despite intermittent weakness. The formation of lower highs indicates that rallies are being sold into, reflecting a cautious undertone.
“Overall, the index remains confined within 23,750–24,250. As long as it sustains below resistance, a cautious stance persists, making sell-on-rise the preferred strategy, while a decisive breakout will be key for the next directional move,” said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.
“Technically, the market sentiment is cautiously bullish, but a sustained daily close above 24,250 is needed to extend the rally towards 24350-24450. If 23,900 is not held, the index could test the 23,800–23,700 zone,” said Rajesh Palviya, Head of Research, Axis Direct.
4) L&T falls over 3%
Larsen & Toubro slid to a more than three-week low on Wednesday after the conglomerate posted a 3.1% drop in quarterly profit a day earlier and warned that the ongoing Middle East conflict would slow revenue growth this fiscal year.
Shares of L&T, seen as a barometer of India’s infrastructure sector, fell as much as 3.8% to Rs 3,900 apiece in early trade, after the company flagged on Tuesday that pressures from the Middle East conflict would build over the next two quarters.
The Middle East accounted for about 40% of L&T’s $77.82 billion order backlog in the quarter ending March 31.
The stock has shed about 8.2% since the Iran war began on February 28, compared with a 4.2% drop in the broader Nifty 50 index.
On Tuesday, the firm said it expects revenue to grow at a slightly slower pace of 10-12% for the current fiscal year.
Emkay Research cut its rating on the stock to “Add” from “Buy” and lowered the price target to Rs 4,450 from Rs 4,800.
The brokerage said that despite strong order inflows and a robust backlog, L&T’s results were impacted by weaker execution and margin pressures.
The firm said it aims to keep margins broadly stable at around the reported 8.3% for fiscal 2027 and expects an order book growth of 10-12%.
“Challenging geopolitical conditions may slow market share gains and new market expansion. While strong execution supports a long-term outlook, near-term growth and margin risks persist,” analysts at HSBC Global Investment Research said.
With inputs from Reuters