Sensex Reverses Gains, Nifty Hovers Around 24,150: Three Key Factors Behind Market Correction
Market Gains Paralyzed Amid Profit Booking and FII Selling
The equity benchmark indices experienced a decline in their early gains as investors engaged in profit booking following a sharp rally. This shift in sentiment came after the indices had surged by as much as 1.2% in early trade, driven by several key factors.
April Auto Sales and Crude Price Easing Boost Market
The rally was initially fueled by the release of April auto sales data, which showed a positive trend. Additionally, the easing of crude prices also contributed to the market's upward momentum. Furthermore, the likelihood of the Bharatiya Janata Party (BJP) winning in West Bengal added to the market's optimism.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
FII Selling Weighs on Market
However, the market's gains were eventually pared due to persistent Foreign Institutional Investor (FII) selling. On Thursday, FIIs offloaded equities worth Rs 8,047.86 crore, which put downward pressure on the market.
| Market Sector | Thursday's FII Selling (Rs crore) |
|---|---|
| Equity | 8,047.86 |
| Total | 8,047.86 |
This significant FII selling weighed heavily on the market, ultimately leading to the decline in early gains. As a result, the market's momentum was slowed, and investors took a cautious approach, engaging in profit booking.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Investor Takeaway
Investors should be cautious and book profits in the short term due to potential market correction.
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