After a euphoric Monday, Tuesday opened with a thud for Dalal Street. The Sensex nosedived nearly 1,000 points while the Nifty50 sank about 300 points in early trade, as the bulls seemed to vanish overnight. What caused this dramatic turnaround?
From Monday’s Highs to Tuesday’s Lows
Monday’s rally was fuelled by multiple positive triggers — including a temporary ceasefire between India and Pakistan, a 90-day tariff rollback between the US and China, easing geopolitical tensions, and a sovereign credit rating upgrade. But come Tuesday, it became clear that the market had already priced in most of this optimism.
Experts suggest that the rally was driven more by short-covering and retail participation rather than institutional buying. In fact, net FII and DII inflows stood at just ₹2,694 crore, signalling that big players were not too convinced. “The 916-point rally in Nifty was not institution-led,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. This lack of conviction from institutional investors made the rally fragile — and ripe for a sell-off.
Profit Booking Overpowers Sentiment
Investors seized the opportunity to book profits, sensing limited upside in the absence of fresh positive cues. This led to sharp selling across sectors. The Nifty IT and Realty indices were among the worst performers, dragging the broader market lower. The sharp swings reflect the high level of uncertainty and volatility that continues to grip investors.
What Lies Ahead?
The current decline doesn’t necessarily signal a long-term bearish trend, but rather a breather after a sharp surge. In the short term, markets may remain choppy as traders look for stronger cues — whether domestic reforms, global data, or earnings surprises — to sustain momentum.
Read more: India proposes zero tariffs on most US products: Report
In Summary
Tuesday’s slump is a classic case of the market running ahead of itself — and now catching its breath. With no fresh fuel, the fire from Monday’s rally began to cool quickly.
