Markets Reverse Course: Sensex, Nifty Tumble 1.5% But Defence Stocks Shine

The Indian stock market reversed its course and witnessed a sharp decline on Tuesday as investors switched to profit-booking. Domestic benchmark indices, Sensex and Nifty, declined by around 1.5%. While most of the sectors were trading in the red territory, Defence and Pharma bucked the trend.

The Nifty India Defence index surged by almost 200 points or 4.12%. The Pharma index followed suit and closed the trading session at 21,359.75, increasing by 257 points or 1.22%.

Almost all stocks from the BSE Sensex30 pack were in red, excluding Sun Pharma, Adani Ports, Bajaj Finance, SBI and Tech Mahindra. BSE Sensex concluded the trading session at 81,148.22 level mark, down by over 1,200 points or 1.55%. Meanwhile, the NSE Nifty50 index closed above the psychological 24,500 level, down by 1.39% or 346 points.

"The domestic market witnessed profit booking today, following yesterday’s sharp rally. The relief-driven surge—fuelled by easing global and domestic risks, including a reduction in trade war tensions and Indo-Pak geopolitical stress—appears to be taking a breather," said Vinod Nair, head of research, Geojit Investments Limited. Analysts believe that the recent market movement signals caution among D-street players despite easing geopolitical tensions and relatively stable global cues.

Small & Mid-cap stocks buck the trend

Interestingly, small and mid-cap stocks experienced a continued buying spree. The S&P BSE SmallCap index surged by nearly a per cent or 482 points. "This consolidation is primarily affecting large-cap stocks, while mid- and small-cap segments continue to gain traction. This divergence is expected to persist, supported by broad-based earnings improvements reflected in Q4 results so far," said Nair.

Markets started the week on a robust note as geopolitical tensions eased, with de-escalating border tensions between India and Pakistan and prospective talks between Russia and Ukraine.

"The dip in the index reflects caution among participants despite easing geopolitical tensions and stable global cues. However, we expect the overall tone to remain positive, given the noticeable support in the 24,400–24,600 zone," said Ajit Mishra, SVP, research, Religare Broking.

"The focus should remain on identifying key sectors and themes showing relative strength and using intermediate pauses to accumulate quality stocks," Mishra said.