Sensex dips nearly 800 points, Nifty down 210 points, day after record single-day gain

By | May 13, 2025

Mumbai, May 13 — A day after registering its biggest single-day gain in nearly three years, Indian equity markets took a sharp U-turn as investors opted for profit booking. The benchmark Sensex plunged 798.14 points, or 1.05%, to close at 75,391.58, while the broader Nifty 50 slipped 210.45 points, or 0.92%, ending the day at 22,764.95.

This correction comes barely 24 hours after Monday’s euphoria when Sensex had soared over 1,600 points and Nifty had breached the 23,000 mark for the first time ever. However, Tuesday’s sharp selloff reflects growing investor caution ahead of key macroeconomic data and ongoing global uncertainties.

What Triggered the Market Reversal?

The downturn is largely being attributed to profit booking after Monday’s euphoric rally. According to analysts, the sharp jump in valuations gave traders an incentive to book gains, especially in frontline stocks that had seen significant inflows in the previous session.

Market participants also remained cautious ahead of the US inflation data and India’s retail inflation numbers, which are expected later this week. Rising concerns over interest rate directions, both globally and domestically, added to investor nervousness.

Key Sectoral Trends

A broad-based selloff was visible across major indices:

  • Banking and Financials led the decline, with stocks like HDFC Bank, ICICI Bank, and SBI losing between 1–2%.
  • IT stocks such as Infosys, TCS, and Wipro also witnessed selling pressure amid fears of continued macroeconomic challenges in the US and Europe.
  • FMCG, pharma, and metal stocks were relatively resilient but failed to offset broader losses.

The Nifty Bank index dropped nearly 1.3%, while the Nifty IT index declined about 1.5%. The Volatility Index (India VIX) also spiked over 6%, indicating growing nervousness among traders.

Top Gainers and Losers

Despite the broader correction, a few stocks managed to stay in the green. Among Nifty constituents:

Top Gainers:

  • Coal India (+2.1%)
  • Britannia Industries (+1.5%)
  • NTPC (+1.3%)

Top Losers:

  • Tata Motors (-4.7%)
  • HDFC Bank (-2.4%)
  • Tech Mahindra (-2.1%)
  • Axis Bank (-1.9%)

The decline in Tata Motors came after the company posted strong Q4 numbers, suggesting that investors may have used the event to book profits.

Domestic Factors at Play

Market participants are closely tracking India’s consumer inflation (CPI) and industrial output (IIP) data due this week. Both indicators are crucial in assessing the Reserve Bank of India’s next move on interest rates.

Experts say that if inflation remains sticky, the central bank may adopt a more hawkish tone, putting pressure on rate-sensitive sectors such as banking, auto, and real estate.

Global Cues Add to Pressure

On the global front, investor sentiment remains fragile. Asian markets were mixed on Tuesday, and Wall Street futures pointed to a flat open as investors await the US CPI data scheduled for release on Wednesday.

Geopolitical tensions in the Middle East and concerns around sluggish economic recovery in China also weighed on investor confidence.

FII and DII Activity

According to provisional data from exchanges:

  • Foreign Institutional Investors (FIIs) turned net sellers, offloading ₹1,245 crore worth of shares.
  • Domestic Institutional Investors (DIIs) bought shares worth ₹890 crore, partially cushioning the fall.

The return of FII selling after Monday’s heavy buying suggests a cautious approach ahead of global economic updates.

Analyst Take: Market Still on Strong Footing

Despite today’s fall, analysts maintain that the medium-to-long-term outlook for Indian markets remains strong, supported by robust corporate earnings and improving domestic macro indicators.

“What we’re seeing today is a typical case of healthy profit booking after an overstretched rally. This is not a change in trend but a normal market reaction,” said Mahesh Patel, Head of Equities at a Mumbai-based brokerage.

He added that traders should stay nimble in the short term but long-term investors should view any dips as buying opportunities, particularly in quality large-cap and defensive names.

What Should Investors Do?

  • Short-term traders should stay cautious due to heightened volatility.
  • Long-term investors can use this dip to accumulate fundamentally strong stocks.
  • Keep an eye on upcoming data releases, including India CPI, US CPI, and global central bank commentaries.

Conclusion

The sharp decline in Sensex and Nifty after a record-breaking rally serves as a reminder that markets don’t move in a straight line. While the underlying fundamentals of the Indian economy remain strong, short-term corrections are part and parcel of a healthy market cycle. Investors should focus on long-term goals and not be swayed by daily volatility.