Profit-taking, geopolitical jitters drag indices lower for second straight session

Mumbai: Indian equities slipped for the second straight session on Tuesday as profit-booking weighed on sentiment, with technical indicators flashing overbought signals on the daily charts. Analysts said geopolitical concerns and a decline in index heavyweights also contributed to fall, though they expect this to be a temporary pause in ongoing rally.

The NSE Nifty dropped 71.6 points, or 0.3%, to close at 26,178.7, while the BSE Sensex fell 376.3 points, or 0.4%, to 85,063.34. Both benchmarks had hit fresh intraday highs on Monday before ending lower. "Structurally, the Nifty remains in a robust uptrend, though the current price action suggests a healthy mean reversion, aligning with the historical seasonal sluggishness of January," said Bhavya Shah, technical research analyst at Stoxbox.

Shah noted that the index is consolidating as momentum oscillators cool off from overbought zones, signalling temporary pause in accumulation. On sectoral front, Nifty Pharma and Healthcare indices were top gainers, rising 1.7-1.8% each.

Tuesday's decline was led by heavyweights Reliance Industries and HDFC Bank, said Sunny Agrawal, head of fundamental research at SBI Securities. Reliance shares fell 4.4%, while HDFC Bank slipped 1.5%.

"However, optimism over acceleration in the earnings growth to double-digit in the ensuing December quarter results, likely focus on capex-driven growth strategy by the government in the upcoming Union Budget, relatively comfortable valuations and reduction in selling intensity by FIIs on the back of relative stable dollar are primary factors that will continue leading the rally in the market in the short term," Agrawal said.

Shah pegged immediate support for Nifty at 26,050 followed by 25,880, with resistance at 26,325 and 26,500. "Unless we see a decisive close above 26,325 with volume support, the index is likely to remain range-bound," he said. The broader market also softened, with Nifty Midcap 150 down 0.2% and Nifty Smallcap 250 lower by 0.3%. Out of the total 4,349 stocks traded on BSE, 1,575 advanced and 2,606 declined at close.