Markets slide as profit-taking overshadows recent gains 

Stock markets snapped the seven-day winning run on Wednesday with benchmark Sensex tanking 728 points due to profit-taking in banking and IT shares ahead of monthly expiry of derivatives contracts.The stock market experienced a significant pullback on Wednesday, breaking a seven-day winning streak as investors took profits and grew cautious ahead of potential U.S. tariff announcements. The Sensex tumbled 728.69 points (0.93 per cent) to close at 77,288.50, while the Nifty 50 declined 181.80 points (0.77 per cent) to settle at 23,486.85.

The market’s downturn was primarily driven by uncertainty surrounding upcoming U.S. tariff policies, expected to be announced on April 2, which cast a shadow over sectors with significant U.S. market exposure, particularly IT and pharmaceutical companies. Investors who had enjoyed a robust rally over the past weeks began securing their gains, leading to widespread profit-taking across various sectors.

“Profit taking halts week-long rally,” noted Devarsh Vakil, Head of Prime Research at HDFC Securities. “The market’s momentum stalled as traders digested recent gains and assessed geopolitical uncertainties.” He added, “Lingering worries surrounding the impending April 2 tariff deadline has triggered heightened global market volatility, causing investors to adopt a cautious approach to their investment decisions.”

Shrikant Chouhan from Kotak Securities provided additional insight, stating, “Technically, after a muted open, the market consistently faced selling pressure at higher levels. From the day’s highest points, the market corrected over 285/950 points.” He further explained that the market has “formed a bearish candle on the daily charts, which supports further weakness from the current levels.”

Sectoral performance revealed widespread weakness, with the Media index suffering the most significant decline at 2.40 per cent. Financial services, realty, PSU banks, and IT sectors also experienced substantial selling pressure. The broader market indices reflected this trend, with the Nifty Midcap 100 index falling 0.62 per cent and the Nifty Smallcap 100 index dropping 1.07 per cent.

Hardik Matalia from Choice Broking offered a nuanced perspective on the market movement: “On the daily chart, the Nifty index formed a strong bearish-bodied candle, indicating significant selling pressure throughout the session and closing near the day’s low.” He cautioned traders, advising that “Given the heightened volatility, traders are advised to maintain strict stop-loss measures and avoid holding overnight naked positions to safeguard capital.”

Despite the negative sentiment, some individual stocks showed resilience. IndusInd Bank emerged as the top gainer, climbing 3.34 per cent, followed by Trent at 2.37 per cent and Hero MotoCorp at 0.69 per cent. Conversely, NTPC led the losers, falling 3.52 per cent, with Tech Mahindra, Cipla, Axis Bank, and Bajaj Finance also experiencing significant declines.

The Indian rupee demonstrated strength, rising 5 paisa to close at 85.70 against the dollar, supported by continued foreign capital inflows. Mr. Dilip Parmar from HDFC Securities noted, “The Indian rupee gained strength following a short pause on Tuesday, driven by a resurgence of foreign fund inflows.”

Commodity markets also saw notable movements, with Comex gold trading near $3,030 per ounce. Jateen Trivedi from LKP Securities commented, “Gold remained range-bound near ₹87,575 in MCX and $3,015 in Comex as market participants awaited key economic data, including US GDP and Core PCE Price Index.”

Technical analysts provided mixed outlook. Mr. Nagaraj Shetti from HDFC Securities viewed the correction as potentially healthy, stating that “The market is in a healthy downward correction and one may expect Nifty to bounce back shortly after forming higher bottom.” The next lower supports are placed around 23,400-23,200 levels.

Hrishikesh Yedve from Asit C. Mehta Investment Intermediates added technical context, noting that “Technically, on the daily chart, Nifty formed a red candle, indicating weakness. Moreover, the index has broken its 100-Days Simple Moving Average (100-DSMA), placed near 23,500, which will now serve as an immediate hurdle for Nifty.”

Key support levels were identified around 23,400-23,200, with resistance expected at 23,600. The India VIX declined by 1.21 per cent to 13.47, indicating a potential reduction in market volatility.

Looking ahead, market participants will closely monitor economic data, including the U.S. GDP and Core PCE Price Index, as well as developments in geopolitical tensions that could impact market sentiment.