Stock market slide: Nifty down 1%, Sensex sheds over 1,000 points in 3 days- key reasons for the fall
Equity indices extended their decline on Wednesday, with the Sensex and the Nifty ending lower for a third consecutive session as sustained selling in heavyweight stocks, rising geopolitical unease and weak global cues dented investor confidence. The BSE Sensex has shed over 1,144 points in the past three sessions, sliding from a close of 85,762.01 on January 2 to an intraday low of 84,617.49 on Wednesday.
The NSE Nifty 50 has declined nearly 1 per cent over the same period, pushing benchmarks firmly into the red for the week.By the close, the Sensex had pared some losses to end 102 points, or 0.12 per cent, lower at 84,961.14, while the Nifty slipped 38 points, or 0.14 per cent, to settle at 26,140.75.
Heavyweight stocks drag indices
Selling pressure in index heavyweights continued to exert disproportionate pressure on the benchmarks.
HDFC Bank shares fell 1.7 per cent on Wednesday, while Reliance Industries declined 0.4 per cent.
Trent dropped 1.4 per cent, extending weakness after plunging 8.6 per cent in the previous session amid concerns over intensifying competition in the retail segment.The drag from large-cap stocks was also evident earlier in the week, when HDFC Bank and Reliance Industries — the two heaviest constituents on the indices — fell 1.5 per cent and 4.3 per cent, respectively, amplifying benchmark losses.Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said recent market movements lacked clear direction, with a few mega stocks disproportionately influencing overall trends.
“For instance, yesterday despite positive institutional buying Nifty drifted down by 71 points, mainly due to sharp declines in two stocks — Reliance and HDFC Bank.
The large volumes in these two stocks in the derivative and cash markets indicate activity associated with the settlement day. In other words, the sharp dips in these stocks have nothing to do with their fundamentals; it is more technical in nature,” he said, as quoted ET.
Geopolitical shock adds to risk aversion
Global risk appetite was further shaken by political turmoil in Venezuela and uncertainty surrounding its petroleum reserves.
Market sentiment turned cautious after a controversial US military operation on January 3 led to the capture of Venezuelan President Nicolás Maduro and his wife, Cilia Flores, and their transfer to the United States to face criminal charges.
Maduro remains in custody in New York.The developments have heightened broader geopolitical and policy-related anxieties.
“Going forward, there is scope for high volatility caused by events and news,” Vijayakumar said, adding that “Trump tweets and actions can always influence the market.
Another important event that investors should closely watch is a possible Supreme Court verdict on Trump tariffs very soon.
If the verdict goes against the reciprocal tariffs, it will create huge volatility in stock markets.”
Weak global cues spill over
Indian equities also tracked declines across Asian markets, where shares retreated as investors assessed the fallout from the Venezuela crisis and uncertainty over global energy supplies.
Japanese equities weighed on regional sentiment after China announced a ban on exports of dual-use items to Japan that can be used for military purposes, following remarks by Japanese Prime Minister Sanae Takaichi on Taiwan.The cautious tone across global markets spilled over into domestic trading, reinforcing the downward bias in Indian equities despite some support in commodity-linked stocks after an overnight rally in industrial metals.
Technicals point to consolidation, volatility risk
Technical indicators suggest the recent decline reflects a broader corrective or consolidation phase rather than a breakdown in the longer-term trend, though near-term volatility remains elevated.Jaykrishna Gandhi, Head–Business Development–Institutional Equities at Emkay Global, noted that since 1991 the Nifty 50 has seen seven major bullish cycles, typically followed by corrective phases.
He said that post-2009, corrections have largely shifted from sharp price declines to time-wise consolidations, reflecting improved structural strength.According to Gandhi, the index has “recently completed a ~1–1.5-year time correction, which historically has been followed by the resumption of a bullish trend,” with upside potential seen “up to 28,500, with positional support band at 25,500–25,300.”On the sectoral front, he highlighted strength in pharmaceuticals, saying “Nifty Pharma has confirmed a breakout from an ‘inverted head and shoulder’ pattern, indicating bullish continuation with upside potential toward 24,000–24,500,” while adding that the bullish bias remains intact “above 23,500.”However, near-term signals point to choppiness.
Anand James, Chief Market Strategist at Geojit Investments, said, “A strong close on Friday near the upper bollinger band suggests continuation of upside momentum.
Oscillators are accommodative as well.” At the same time, he cautioned that “VIX being near record indicates potential for rise in volatility,” underscoring the risk of sharp swings despite a broadly constructive technical backdrop.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own.
These opinions do not represent the views of The Times of India)
