Indian markets witnessed their biggest single-day fall since October 26, with the Nifty shedding over 300 points and the Sensex dipping below 71,000. Analysts identified two key factors behind the slump: profit booking ahead of the Christmas holidays and concerns triggered by Kerala’s rising Covid-19 cases.
Profit Booking Drives Downturn:
Investors, particularly foreign institutional investors (FIIs), opted for profit booking after the recent market rally, particularly in mid- and small-cap stocks with stretched valuations. This profit-taking pressure led to a sudden sell-off in the second half of the trading session.
Kerala Covid-19 Cases Reignite Concerns:
While global markets remained positive, the spike in Covid-19 cases in Kerala cast a shadow of uncertainty over the domestic market. Kerala reported 292 new cases and three deaths on Tuesday, pushing the active case count to over 2,000. This resurgence of the virus, however, did not have a significant impact on major sectors like FMCG, banking, and IT.
Additional Factors:
- The rise in crude oil prices prompted some investors to book profits in oil and gas stocks despite ONGC and Oil India reaching new highs.
- The government’s recent reduction in windfall profit tax on domestically produced diesel and crude oil exports provided some tailwind, but it wasn’t enough to counter the profit-booking wave.
Overall, the Indian market’s fall reflects a combination of profit booking by FIIs due to stretched valuations and uncertainty triggered by the Covid-19 situation in Kerala. While the long-term outlook remains positive, investors should remain cautious in the near term and watch for further developments on both fronts.
This news article summarizes the key reasons behind the Indian market’s decline, highlighting the role of profit booking and Covid-19 concerns. It provides concise and informative coverage for readers interested in understanding the financial landscape.
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