Markets Fall After Four-Day Rally: Nifty Below 25,500, Sensex Nearly 600 Points Down — Key Drivers

The benchmark indices fell nearly 1%, weighed down by Nifty Finance and Nifty Auto. Nifty 50 fell below 25,000, while Sensex was down nearly 600 points. However, the broader segment of the market was positive as the Nifty Midcap 100 was up 0.63% and Smallcap 100 index was 0.93% higher.

Nifty 50 on Monday fell 0.64% to 25,473.30, while Sensex was down 0.69% to 83,482.13.

This came despite improved global risk sentiment from easing tensions in the Middle East and a rebound in foreign inflows. Last week, Sensex and Nifty both ended in the positive territory, with close to 2.5% gains and just below their record highs in September.

"Expect a choppy session with moderate gains, contrasting the fervor of previous days," said Prashanth Tapse, senior VP (research), Mehta Equities Ltd. Nifty has shown robust bullish momentum over the last four trading sessions, but caution is advised amid overbought technical indicators, he said.

The indices had opened in the positive but gave up gains through the day. While Nifty opened 0.9% higher at 25,661.65, Sensex started the day in negative with a 0.04% decline at 84,027.33.

Volatility index VIX rose over 3.81% on Monday.

Global Cues

Asian markets were mixed on Monday amid easing trade tensions and caution ahead of the key US economic data.

Stocks on Wall Street climbed to all-time highs on Friday, capping a week that saw tensions in the Middle East cool off and signs that the US economy is holding up amid subdued inflation.

The S&P 500 closed 0.5% higher at 6,173. Technology-heavy Nasdaq Composite also added 0.5%. The Dow Jones Industrial Average advanced 1%.

European futures were trading lower indicating a higher open, while Asian stocks were trading mixed. US futures were also trading higher with S&P 500 futures up 0.3% and Nikkei 225 futures 1.7% higher. Japan's Topix rose 1.6%, while Australia's S&P ASX 200 was up 0.17%. Hong Kong's Hang Seng declined 0.17%, while Shanghai Composite rose 0.2%.

Rupee

The Indian Rupee opened 1 paise stronger against the US Dollar at Rs 85.47 on Monday, following its close at Rs 85.48 a dollar on Friday. The currency is expected to trade within the range of Rs 85.25 to Rs 85.75 throughout the day.

"The dollar wallowed near its lowest in nearly four years at 97.21 as market optimism over US trade deals bolstered bets for earlier Fed Reserve rate cuts," Bhansali noted.

The Indian Rupee rose to Rs 86.4750 on Friday as selling for the HDB Financial IPO, which was oversubscribed 17 times, concluded.

Oil

Brent crude, the global benchmark for crude oil, fell to $66.52 a barrel on prospects of more OPEC+ supply in August and easing risks in the Middle East. Oil fell, following its biggest weekly loss in more than two years, as hedge funds piled into bearish bets after a fragile truce between Iran and Israel, and before a likely OPEC+ supply hike. Oil is trading near where it started before Israel first attacked Iran on June 13, with the focus returning to supply and demand fundamentals.