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Benchmark indices Sensex and Nifty tumbled on Thursday, halting a three-session winning streak; Know key reasons behind the fall
Why Is Stock Market Falling Today? Check Factors
Equity benchmark indices in India – the Sensex and the Nifty ended lower following a 3-rally amid weakness in capital goods, metal and select auto shares.
The Sensex touched an intra-day low at 83,152, and ended with a loss of 504 points or 0.6 per cent at 83,314. In the process, the Sensex snapped its 3-day winning streak, wherein the benchmark had gained 3,096 points.The NSE Nifty tested a low of 25,579.50, and eventually settled 133 points lower at 25,643 on Thursday.
The mid and small-cap indices dropped up to a per cent. Investors lost about Rs 3 lakh crore in a single session as the overall market capitalisation of BSE-listed firms dropped to Rs 466 lakh crore from Rs 469 lakh crore in the previous session.
The decline was broad-based, with pressure extending to mid- and small-cap counters. The Nifty Midcap 100 index dropped 1 per cent, while the Nifty Smallcap 100 index shed 1.5 per cent.
Among Nifty50 constituents, Hindalco Industries, InterGlobe Aviation and Tata Motors Passenger Vehicles were key laggards, falling up to 4 per cent. On the positive side, Hindustan Unilever and State Bank of India gained as much as 2 per cent. Market breadth remained weak, with about 1,368 stocks advancing, 1,997 declining and 159 unchanged.
What weighed on the market?
1) Metal sell-off
Metal stocks witnessed heavy selling on Thursday, emerging as the worst-performing segment of the market. Profit-taking at higher levels and weakness in precious metal prices weighed on the sector.
The Nifty Metal index slipped nearly 3 per cent to 11,726 in early trade, snapping a three-session winning run.
The decline follows a strong rally in recent days, with the metal index surging over 6 per cent in the previous three sessions to settle at 12,044.25 in the last session, prompting investors to lock in gains.
2) Profit booking after rally
Investors booked profits following the recent surge driven by optimism around the India–US trade pact. Most sectoral indices traded in the red, barring IT and PSU banks. The IT index edged higher after plunging nearly 6 per cent in the prior session on fears of AI-led disruption after Anthropic unveiled automation tools.
“There are some significant near-term trends. The Nifty seems to be consolidating without major index moves, but internal shifts are sharp, especially in IT stocks following the US tech sell-off,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
3) Weak global cues
Asian markets were largely negative, with South Korea’s Kospi plunging over 3 per cent. Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng also traded lower. In the US, the Nasdaq dropped 1.51 per cent and the S&P 500 fell 0.51 per cent, though the Dow Jones rose 0.53 per cent. Wall Street futures were also in the red.
4) Tepid FII inflows
Foreign institutional investors were marginal net buyers on Wednesday, purchasing equities worth Rs 29.79 crore — sharply lower than Tuesday’s inflows of Rs 5,236.28 crore.
5) RBI policy caution
Investors remained cautious ahead of the RBI’s monetary policy outcome. The six-member MPC, chaired by Governor Sanjay Malhotra, began its meeting on Wednesday, with the decision due Friday. An SBI report expects the central bank to hold rates steady.
6) Derivatives expiry volatility
Thursday’s Sensex derivatives expiry added to volatility, as position unwinding and rollovers often trigger sharp moves.
Despite the day’s drop, the Sensex and Nifty have gained roughly 3.8 per cent over the past three sessions, buoyed by optimism over the US trade agreement that lowered tariffs on Indian goods.
Technical view
FundsIndia Equity Research noted that although a bullish candlestick pattern formed on the daily chart, selling pressure may emerge at higher levels. With India VIX above 12, volatility remains elevated. The short-term trend stays bearish and may turn bullish only on a sustained move above 25,300. The 9-day SMA stands at 25,185.
Shrikant Chouhan, Head of Equity Research at Kotak Securities, said resistance lies around 25,800/83,900 (50-day SMA). A breakout above could push the index toward 25,900–26,000/84,200–84,500. On the downside, a fall below 25,600/83,100 may drag the market to 25,500–25,350/82,800–82,500. He added that a level-based trading approach suits the current non-directional market.
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February 05, 2026, 11:02 IST
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