Indian equity benchmarks extended their decline on Monday, with both the Sensex and Nifty falling approximately 0.5% as investors engaged in profit booking amid multiple headwinds. The market weakness intensified investor focus on whether key support levels can withstand persistent foreign fund selling and rising volatility.

Market Performance

By 9:50 a.m., the equity indices showed significant weakness across the board:

Key Factors Behind Market Decline

Several interconnected factors contributed to the market weakness observed during Monday's trading session.

Weak Global Cues

Wall Street futures were trading up to 0.5% lower, indicating a weak opening for US markets. This negative sentiment from global markets created additional pressure on Indian equities, as investors remained cautious about international market developments.

Rising Volatility

The India VIX, commonly referred to as the fear gauge, surged significantly during the session:

This substantial increase in the volatility index reflected heightened uncertainty and risk aversion among market participants.

Currency Market Pressure

The Indian rupee faced additional pressure, depreciating 5 paise to 90.23 against the US dollar in early trade. The currency weakness was driven by multiple factors including rising crude oil prices and continued outflow of foreign funds.

According to forex traders, the volatile geopolitical situation and concerns over potential US tariffs on Indian exports have fueled the selling of Indian stocks by foreign institutional investors. Market participants are now awaiting cues from macroeconomic data scheduled for release this week to gauge future market direction.

Market Outlook

The combination of weak global sentiment, rising domestic volatility, and currency depreciation has created a challenging environment for Indian equities. Investors remain focused on whether key support levels can hold amid the current market pressures and ongoing foreign fund outflows.

Indian equity benchmarks extended their losing streak in early trade on Monday, with both BSE Sensex and NSE Nifty falling approximately 0.5% as volatility surged and key support levels came under pressure.

Market Performance at Opening

The benchmark indices showed significant weakness during the morning session:

Market breadth deteriorated sharply, with 2,367 stocks declining against just 813 advances, while 172 shares remained unchanged. This indicates broad-based selling pressure across market segments, with midcap and smallcap stocks also slipping further.

Technical Analysis and Support Levels

The continued weakness follows last week's sharp correction and Friday's fifth consecutive session of losses. Technical analysts have identified the 25,500-25,600 band as a critical medium-term support zone for the Nifty. A sustained break below this level could open the door to deeper downside, while only a rebound above 25,800-25,850 is expected to ease near-term pressure.

Sectoral Performance

Selling pressure intensified across multiple sectors as the session progressed:

Declining Sectors:

• Realty stocks led the decline
• Media, pharma, infrastructure, and energy sectors under pressure
• Banking and IT stocks also remained weak

Individual Stock Movement:

Volatility Surge

Market volatility jumped sharply during the session, with India VIX surging over 8%. This significant increase reflects heightened nervousness among investors and increased demand for portfolio protection amid the ongoing sell-off.

Global Context and Institutional Flows

Global cues remained mixed, with US markets ending last week at record highs on expectations of rate cuts following weaker jobs data. However, Indian equities continued to lag amid concerns over potential US tariff actions and global trade uncertainty. Foreign institutional investors have remained net sellers, and despite steady domestic institutional buying, the flow imbalance has maintained pressure on equity markets. Crude oil prices remained volatile, adding another layer of market uncertainty.