Markets fall in early trade after 4-day rally dragged by bank stocks

By | June 30, 2025
Markets fall after 4-day rally due to banking stock losses.

After a strong four-day rally that lifted investor sentiment and benchmark indices to new highs, Indian stock markets witnessed a pause in momentum during early trade on Monday. The decline was primarily led by a sell-off in major banking stocks, signaling profit-booking across frontline financial counters.

Sensex and Nifty Open Lower

At the opening bell on June 30, 2025, the BSE Sensex dropped by over 180 points to trade around 83,876, snapping a four-session winning streak. The Nifty 50 index also slipped by nearly 46 points to hover near 25,591, as traders reassessed valuations after the market’s recent surge.

This minor retreat follows a strong week where the Sensex gained over 2,160 points, and the Nifty advanced approximately 666 points — both indices touching fresh highs in the process. However, today’s market tone suggested some caution, as investors opted to lock in gains ahead of the new earnings season and macroeconomic data releases.

Banking Stocks Take a Hit

The banking sector, which had been one of the key drivers of the recent rally, bore the brunt of Monday’s selling pressure. Shares of HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and State Bank of India (SBI) saw notable declines in early trade. The Nifty Bank index slipped over 0.8%, underperforming broader indices.

Market experts suggest this is a case of profit-taking, rather than a structural weakness. The banking sector had seen considerable inflows over the past week, driven by improved credit growth numbers, stable asset quality reports, and hopes of policy continuity following the formation of the new government.

“Investors are booking profits after a phenomenal rally. There’s no fundamental deterioration in bank stocks,” said Anuj Mehta, an equity strategist based in Mumbai. “We could see some consolidation this week ahead of Q1 results from major banks.”

Other Major Losers and Gainers

In addition to banks, stocks like Bharti Airtel, NTPC, Mahindra & Mahindra, and Titan also contributed to the drag on indices. These companies had rallied in the previous sessions and now appear to be correcting marginally.

On the other hand, a few counters bucked the trend. Infrastructure and construction major Larsen & Toubro (L&T) managed to stay in the green, backed by reports of new government contracts. FMCG player Trent Ltd. also rose in early trade, extending its upward trajectory from the previous week.

Profit Booking After Rally

Analysts say the market’s fall isn’t surprising given the extent of the recent rally. From mid-June to the end of the month, Indian markets witnessed robust gains driven by several positive triggers — including stronger-than-expected monsoon forecasts, falling crude oil prices, and renewed foreign institutional investor (FII) interest.

“There’s a natural tendency for traders to take profits when the market touches a new high,” said Renu Bhatia, a senior fund manager. “This correction is healthy and could help reset valuations.”

Global and Domestic Cues

Markets worldwide showed mixed signals at the start of the week. Asian peers such as the Nikkei and Hang Seng traded mostly flat to negative, while Wall Street had ended the previous session in the green. Crude oil prices remained soft, with Brent crude trading around USD 84 per barrel.

On the domestic front, investors are awaiting inflation data for June and early guidance from RBI, which recently surprised markets with a 50 basis point cut in the repo rate. The policy stance continues to remain growth-focused, especially with global economic indicators pointing toward a slowdown.

FIIs Stay Optimistic

Despite Monday’s mild correction, Foreign Institutional Investors (FIIs) have remained net buyers in Indian equities. On Friday alone, FIIs pumped in ₹1,397 crore, reflecting confidence in the Indian growth story.

According to analysts, India continues to be one of the most attractive investment destinations in emerging markets, driven by strong GDP numbers, political stability, and tech-enabled growth across sectors.

“FIIs are using any dip as a buying opportunity,” said Sanjay Ahuja, Head of Institutional Sales at a leading brokerage. “This week’s correction could also see fresh foreign inflows, especially into beaten-down sectors like FMCG and auto.”

Investor Sentiment Still Strong

Retail participation remains robust, with trading volumes remaining high across both cash and derivatives segments. While the dip in banking stocks has triggered some nervousness, most analysts believe the broader uptrend remains intact.

Sectors such as capital goods, real estate, pharma, and IT are expected to witness renewed interest as investors look to diversify beyond banks and financials.

Moreover, with the upcoming budget session and Q1 earnings season just around the corner, the next few weeks will offer critical triggers for both upside and downside.

Technical View and Support Levels

Technically, the Nifty is still trading well above its 20-day and 50-day moving averages, indicating a bullish undertone. However, near-term support is seen around the 25,400 mark, while 25,800 remains the immediate resistance.

For the Sensex, support lies at 83,500, with upside resistance near 84,300.

Traders are advised to remain cautious, maintain stop-losses, and avoid aggressive positions ahead of earnings announcements and economic data.

What to Watch Ahead

Here are a few key events to watch in the coming days:

  • Quarterly results from major banks like HDFC Bank, Axis Bank, and SBI.
  • June inflation data to gauge whether the RBI’s dovish stance will continue.
  • FII investment trends, especially in the mid-cap and small-cap segments.
  • Monsoon progress and its impact on rural demand, especially in FMCG and agri stocks.
  • Global central bank commentary, particularly from the US Federal Reserve and European Central Bank.

Conclusion

The market’s fall on Monday marks a healthy breather after a strong four-day rally. While profit-booking in banking stocks weighed down indices, the broader economic and market outlook remains positive. Investors should treat this dip as a consolidation phase and continue focusing on long-term fundamentals rather than short-term volatility.

As the earnings season kicks off and economic cues unfold, market participants will have more clarity on where equities are headed next. For now, staying selective, avoiding overleveraging, and watching global developments closely will be the key to navigating the weeks ahead.