Market Pulses: Sensex Crashed 1,055 Pts, Nifty Hit 24,700 On Huge Profit Booking; 5 Reasons Why

The Indian stock market witnessed a sharp bearish trend on Tuesday, May 27th, with Sensex toppling by 1,055 points and Nifty 50 hitting below the pivotal 25,000 mark to the day's low of 24,704.10. The market snapped from its two consecutive weekly winning streaks, as huge profit booking emerged in heavyweights like financials, IT and auto stocks.

The lack of domestic catalysts and selloffs from foreign investors added to the woes. The market is also cautious ahead of GDP numbers scheduled for later this week. Also, Sebi fixed the settlement days for F&O expiry on BSE and NSE to Tuesday and Thursday.

Sensex, Nifty Price:

After falling by 1,054.75 points to an intraday low of 81,121.70, the Sensex closed at 81,582.63. The benchmark dipped by 593.82 points, or 0.72%, during the closing bell. Ultratech Cements, ITC, Tata Motors, Axis Bank, and NTPC emerged as top losers of the day, with a decline of 1.4% to 2.2%.

On the BSE, a total of 4,084 stocks traded on Tuesday, of which 1,957 stocks advanced and 1,979 stocks declined. The rest of the 148 stocks ended flat. However, 89 stocks managed to hit new 52-week highs, but 26 stocks touched their 52-week lows.

Additionally, the BSE-listed companies' market value stood at Rs 44,365,465.86 crore. That being said, at least Rs 1,14,214.18 crore of investors' wealth was eroded on Tuesday, compared to a market cap of Rs 4,44,79,680.04 crore in the previous session.

Meanwhile, Nifty ended at 24,826.20, down by 174.95 points, or 0.70%. This comes after the benchmark plunged by 297.05 points and an intraday low of 24,704.10. Midcaps and small caps defied the bearish trend and saw mild gains. India's volatility index surged by 3%.

"Stock markets faced a lacklustre session on Tuesday, dragged down by mixed global cues and widespread profit booking. The Sensex closed 624.82 points lower at 81,551.63, while the Nifty 50 slipped 174.95 points to 24,826.20. Weakness was led by FMCG and IT stocks, both dropping over 1%, overshadowing marginal gains in defence, realty, media, and PSU banks. Key gainers included Jio Financial, IndusInd, Trent, BEL, and Asian Paints. However, major drags were Ultratech, ITC, Axis Bank, JSW Steel, and Grasim. The midcap and smallcap segments hovered flat," said Vikram Kasat, Head - Advisory, PL Capital.

Also, a new IPO is listed on the BSE and NSE at a premium. Borana Weaves gained by 12.15% in its opening bell on exchanges from its IPO price of Rs 216. The stock rallied by over 18% in the day. Another IPO, Belrise Industries, is lined up for listing on May 28.

Further, Kasat's note said, "Indian indices opened weak, mirroring global market softness, as selling pressure in financials and IT continued. Among individual stocks, Healthcare Global Enterprises lost 11.95% over five sessions, while Devyani International and Gensol Engineering also declined notably."

Here are 5 factors that pushed market down on May 27:

1. Auto Stocks Downfall:

The Nifty Auto index tumbled by 0.7% to close at 23,596.90. The majority of stocks ended in the red. Tata Motors was the top loser with nearly a 1.7% drop, followed by MRF, M&M, and Samvardhana Motherson, which dropped by 1.6%, 1.2%, and 1.1%, respectively. Other stocks like Balkrishna, Eicher Motors, Maruti Suzuki, and Ashok Leyland were also down.

This performance comes ahead of auto sales data for the month of May. Auto companies usually announce their monthly sales figures in the first two days of every month.

2. FMCG Stocks In Monsoon Blues:

Nifty FMCG index declined by nearly 1% to close at 56,547.60. FMCG giant ITC was the top bear with a 2% decline, followed by United Spirit, Godrej Consumer, Tata Consumer and UBL which dipped 1% to 1.5%. FMCG stocks will be in focus due to the monsoon and upcoming RBI policy outcomes, as they are rate-sensitive sectors.

"Fertilizer, Agrochemical, FMCG, Auto and rural finance sectors would remain in focus due to the early onset of the monsoon and forecasts of above-average rainfall. Both FIIs and DIIs were net buyers of over Rs2,000 collectively on May 23rd, supporting the firm market trend," Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services, said.

3. IT Stocks Dampen Mood:

The IT stocks witnessed profit booking after significant gains. Nifty IT index declined by 0.75% to finish at 37,501.45. Investors cashed in profits in heavyweight stocks like HCL Tech, TCS, Persistent Systems, Wipro and Infosys, which dropped by 0.6% to 1.3%.

4. F&O Expiry Settlement Dates:

The market regulator Sebi has fixed the equity derivatives expiry days on BSE and NSE. As per the new rules, the Indian stock exchanges will get to select one weekly expiry day, which can either be Tuesday or Thursday. At present, F&O expiry is carried out on Tuesday for BSE and on Thursday by NSE. The new rules will be implemented from June 15.

"The upcoming F&O expiry further added to the choppiness, prompting some intraday profit booking," said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services.

The Nifty May series rollover stood at 52.2% on Monday, significantly higher than the three-month average of 35.0% and the six-month average of 35.4%. Compared to the previous expiry's 29.8%, this indicates a strong pickup in rollover activity, reflecting increased trader confidence in carrying forward positions. Sectorally, Realty, NEW_Age, Power and Metals demonstrated higher rollovers, pointing to a positive outlook and strategic accumulation. Meanwhile, Banking, Auto, FMCG, Technology and cement exhibited lower rollovers, suggesting cautious sentiment or realignment of positions, as per the Axis Securities report.

5. Global Market Trends:

Sensex and Nifty tracked a mixed global trend. European shares were up on Tuesday, while Asian cues traded mixed and volatile. The FTSE index gained 1%, while the DAX index was up 0.7%.

On the other hand, South Korea's KOSPI dipped marginally, and Japan's Nikkei 225 gained 0.5%. Hong Kong's Hang Seng surged 0.4%, but China's Shanghai Composite was in the red. Taiwan's TAIEX index saw selling of 0.9%. However, Sensex and Nifty witnessed the most selling on Tuesday.

The US market will open on Tuesday after a three-day holiday. Wall Street was closed on Monday, May 26th, due to Memorial Day.

Investors are now eyeing key global events, including the release of the minutes from the latest FOMC meeting, which could provide cues on the Fed's policy outlook amid persistent inflation and fiscal stress. Markets are likely to remain volatile in the near term, with a watchful eye on global developments, trade negotiations, and remaining corporate earnings, said Khemka's note.