All 13 major sectors on the Nifty 50 experienced losses, with small-cap and mid-cap indices falling by approximately 2 per cent to 2.6 per cent respectively| Photo Credit:MicroStockHub
Benchmark indices plummeted in late morning trade on Friday, wiping out initial gains as investors rushed to book profits amid escalating geopolitical tensions. The Sensex crashed to 78,776.61, down 1,024.82 points (1.28 per cent), while the Nifty50 plunged below the psychologically crucial 24,000 mark to 23,896.40, declining 350.30 points (1.44 per cent) as of 11.25 am.
The sharp reversal comes after a brief positive opening, suggesting that despite strong global cues and continued FII buying, domestic concerns have triggered a significant sell-off.
“Markets have been on a winning streak, markets have risen from a level of 22,000, it touched a level of 24,400. So after this winning streak, there is a tendency to book profits and the rising geopolitical tensions have also weighed on investors to book some profit and staying on cash due to the rising geopolitical tensions,” said Kranthi Bathini, Director - Equity Strategy, WealthMills Securities Pvt Ltd.
The deteriorating geopolitical situation between India and Pakistan following the Pahalgam terror attack appears to be weighing heavily on investor sentiment. India has suspended the Indus Water Treaty and downgraded diplomatic ties with Pakistan, escalating tensions in the region.
All 13 major sectors on the Nifty 50 experienced losses, with small-cap and mid-cap indices falling by approximately 2 per cent to 2.6 per cent respectively, indicating a broad-based sell-off across market segments.
“The Indian stock market experienced a sharp decline today. After a near positive opening, the Sensex fell over 1000 points and Nifty 50 dropped below the 24,000 mark. This downturn is attributed to the combination of geopolitical tension, profit-booking and global market cues,” said Kunal Kamble, Sr. Technical Research Analyst at Bonanza Group.
Banking stocks continued their decline, with Axis Bank shares dropping by almost 3.7 per cent due to concerns over asset quality, despite the bank beating quarterly profit estimates in its recently announced results.
The steep drop comes after an impressive seven-day winning streak that had pushed the markets to record highs. The Nifty had rallied approximately 12 per cent in the past two weeks, making the market ripe for a correction.
“After a seven day winning streak, investors are engaging in profit booking and the markets had been on an upward trajectory. And this correction is seen to as a natural response to the recent gains,” Kamble added.
From a technical perspective, the market has reached critical support levels. “If we see today’s levels, immediate support is seen at 24,000 levels. This level is crucial as it is having a 50 per cent fib retracement and a sustained move below this could indicate a further weakness. If we talk about major support levels, it is at 23,800,” noted Kamble.
For any potential recovery, “Talking about the resistance, 24,350 will act as immediate resistance, followed by 24,500. This resistance is needed to be breached for a bullish reversal,” Kamble explained.
Foreign institutional investors (FIIs), who were on a buying spree for seven consecutive sessions with purchases worth ₹8,250 crore on April 24 alone, appear to have been unable to counter the domestic selling pressure.
The market volatility is further heightened by India VIX, which had jumped 70 per cent in a single day earlier this week, rising from 14 to 23, before cooling down to 16.35.
As investors await quarterly results from heavyweight companies including Reliance Industries, Maruti Suzuki, and scheduled for today, the market sentiment remains cautious with traders increasingly moving to cash positions due to the uncertain geopolitical climate.
The sudden sharp correction serves as a reminder of market vulnerability despite strong fundamentals, as the combination of extended rallies, profit-booking tendencies, and external geopolitical factors can trigger significant market movements even amid positive global cues.
Published on April 25, 2025
