Sensex and Nifty Retreat: A 400-Point Plunge and Key Market Indicators

Indian Stock Market Tumbles Amid Profit Booking and Global Uncertainty

The Indian stock market benchmarks, Sensex and Nifty, were trading in the red on May 26, with the Sensex falling 300 points from its day's high and the Nifty hovering near the psychologically important 24,000-mark.

At 1:07 pm, the Sensex was down 281.99 points or 0.37% at 76,206.97, while the Nifty was down 60.40 points or 0.25% at 23,971.30. A total of 2,060 shares advanced, 1,679 shares declined, and 157 shares remained unchanged.

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Tata Motors Passenger Vehicles extended its gains to become the top gainer in the Nifty 50 index, with the stock up 3% and hitting its one-month high at Rs 386.40 per share. Peers Bajaj Auto and Maruti Suzuki also gained around 1% each. Adani Enterprises, up 3%, was another notable gainer, having been up for three sessions in a row and hitting its 52-week-high on Monday.

FMCG companies extended their gains from earlier in the session, with Nestle, Hindustan Unilever, and Tata Consumer Products up around 0.5-0.7%. However, Apollo Hospitals Enterprise, down 1.6%, remained the worst performer in the Nifty 50. Its peer Max Healthcare Institute was also in the red, down 0.6%.

Adani Total Gas rose 10% and was the top gainer in both the Nifty 200 and Nifty 500 indices, hitting its six-month high at Rs 731.40. Container Corp. Of India, down over 7%, remained the main laggard in the Nifty 200 index, while Techno Electric & Engineering Co., down over 12%, was the main laggard in the Nifty 500 index.

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The key reasons behind the market's downturn on May 26 were attributed to profit booking, monthly F&O expiry of Nifty, and technical reasons.

Profit booking was seen on May 26 after the benchmarks hit a two-week high on May 25 on hopes that the US and Iran were close to a peace deal. However, US strikes dented hopes of an imminent peace deal with Iran, a day after the indexes jumped to two-week highs as investors bet on the end to the months-long war.

US Secretary of State Marco Rubio stated on Tuesday that negotiating a deal with Iran could "take a few days" after the US struck boats allegedly attempting to lay mines and missile-launch sites.

Analysts noted that the Nifty has to trade above 24,100 to make a move towards 24,400. A decisive move above 24,200 may trigger aggressive short covering and a gamma-driven rally towards the 24,300–24,400 zone, while a break below 24,000 could intensify downside pressure towards 23,800.

The key zone to watch now is between 24,000 and 24,126, which coincides with the downward-sloping trendline from the all-time high and the bearish gap formed on 11th May. A decisive close above this resistance zone could open the door for a further rally towards the 24,500 level. On the downside, the previous session’s bullish gap between 23,922 and 23,836 is expected to provide immediate support, followed by Friday’s closing level near 23,719.