SENSEX drops over 900 points, NIFTY50 trades below 24,800; here are key factors behind sharp fall in Tuesday's session

The Indian equity benchmarks fell sharply lower on Tuesday, May 27. The S&P BSE SENSEX fell as much as 914 points, or 1.11%, to hit an intraday low of 81,262, and the NIFTY50 index touched an intraday low of 24,751, dragged down by losses in index heavyweights like Reliance Industries, ICICI Bank, HDFC Bank, Infosys, Axis Bank and Tata Consultancy Services. As of 10:09 am, the SENSEX was down 757 points at 81,418, and the NIFTY50 index dropped 227 points to 24,774.

Profit booking after two days of gains

Analysts say that selling pressure in Tuesday's session was primarily on account of profit booking after two days of gains in which the 30-share SENSEX surged as much as 1.51% and the NIFTY50 index soared 1.59%.

Investors turned cautious ahead of the release of industrial and manufacturing production data for April on Wednesday and the first quarter GDP numbers, scheduled to be announced later this week, analysts added.

Meanwhile, markets were witnessing heightened volatility owing to the monthly expiry of SENSEX futures and option contracts. India VIX index, the fear gauge, rose 4.85% to 18.90.

Heavyweights drag

Index heavyweights like Reliance Industries, HDFC Bank, ICICI Bank, Infosys, ITC, Larsen & Toubro and Mahindra & Mahindra were seen dragging the markets lower. They collectively wiped out over 400 points from the SENSEX, data from BSE showed.

Meanwhile, all shares, barring IndusInd Bank, in the 30-share SENSEX were trading lower, led by UltraTech Cement's nearly 3% fall. Eternal, Axis Bank, NTPC, Tata Motors and Power Grid were also among the top losers.

In the NIFTY50 index, all shares barring Bharat Electronics were trading lower, paced by losses in Grasim and UltraTech Cement.

Sectoral picture

Selling pressure was broad-based as all sector gauges compiled by the National Stock Exchange were trading lower, led by the NIFTY Oil & Gas index's 1% fall. Oil & Gas shares came under selling pressure ahead of a closely watched OPEC+ meeting that could provide key signals on future supply levels.

NIFTY Auto, Bank, Financial Services, Metal, FMCG, IT, PSU Bank and Private Bank indices also fell between 0.75%-1%.

Meanwhile, broader markets were showing resilience amid selling pressure as the NIFTY Midcap 100 index fell 0.38% and the NIFTY Smallcap 100 index was largely unchanged.

The overall market breadth was negative as 1,833 shares were declining while 1,347 were advancing on the BSE.