Why Are BSE Sensex And Nifty 50 Falling Today After Monday’s Big Rally?

Stock Market Today: The Indian stock market saw a dip on Tuesday, May 13, following a sharp rally in the previous session in the early trading session. The Nifty 50 index slipped by 120.85 points or 0.48%, trading at 24,803.85, while the Sensex fell by 487.08 points or 0.59%, trading at 81,942.82.

This decline came just a day after markets surged sharply, with the Nifty 50 posting its biggest single-day gain since February 1, 2021, rising over 865 points to hit 24,873.90. That rally was supported by easing tensions between India and Pakistan, positive developments in U.S.-China trade talks, and strong global cues.

Profit Booking After Sharp Gains

Market experts believe Tuesday’s fall is largely due to profit booking after Monday’s massive rally. Nilesh Jain, Head of Derivatives and Technical Research at Centrum Broking, explained, “Yesterday, we saw one of the biggest intraday jumps in the last 4 years. Usually, after such a sharp spike, some profit-taking follows. So today we are witnessing a profit-taking session.”

He added that the market could still see another leg up once it stabilises, but a key concern is the India VIX (Volatility Index), which has remained elevated. “It needs to cool off below 17 for bulls to regain control. If it rises further, we may see more selling pressure,” he said.

Also Read: Why Did Quick Commerce Giant's Stock Plunge To 52-Week Low?

IT Stocks Under Pressure

The IT sector, which was among the biggest gainers on Monday due to optimism around the U.S.-China trade deal, saw a sharp decline on Tuesday. The Nifty IT index dropped 1.19%.

Sugandha Sachdeva, Founder of SS WealthStreet, noted, “IT stocks are down after witnessing a sharp upside of around 6.78% in the previous session. Today, we are seeing some cooling off. It’s not a change in trend, but just minor profit booking.”

“Nifty IT index witnessed an 8% rally in the last couple of trading sessions. It is now within touching distance of the 200-day exponential moving average (38900) and hence is witnessing routine profit booking around the resistance zone. There is no evidence of a trend reversal pattern, indicating that the uptrend is still intact and today's weakness is only a routine profit booking," said Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan.

“Crucial support levels for the Nifty IT index are placed at 37300 - 37200. On the upside, we expect this rally to continue towards 40000 - 40200 from a short-term perspective,” he added. 

Other Factors Weighing on Sentiment

Apart from profit-taking, rising crude oil prices and a stronger U.S. dollar (DXY index) are also pressuring market sentiment. Additionally, geopolitical tensions haven’t fully eased. “The ceasefire seems fragile, as there have been fresh border encounters,” Sachdeva said.

Meanwhile, Dow Jones futures were trading with minor losses during Indian market hours, further adding to the cautious mood.

Sectoral Performance

Despite the benchmark indices falling, market breadth on the NSE was positive. Out of 2,797 stocks traded, 1,993 advanced, 733 declined, and 71 remained unchanged. A total of 36 stocks hit their 52-week high, while only 6 stocks touched their 52-week low.

The pharma, PSU bank, and healthcare sectors managed to stay in the green, gaining up to 1.83%. On the other hand, FMCG, realty, and private banks joined IT in the red zone.