Explained: Why Sensex and Nifty are struggling after strong start

The benchmark stock market indices, Sensex and Nifty, faced a challenging start despite initial optimism during Tuesday’s trading session.

At approximately 9:15 am, the S&P BSE Sensex surged to a level exceeding 67,400, while the NSE Nifty 50 reached a fresh high of 20,110. However, these early gains proved short-lived as both indices lost momentum by 10 am and have struggled to regain it since.

As of 10:15 am, the Sensex managed only a modest gain of 32 points, reaching 67,159.63. In contrast, the Nifty 50 experienced a slight dip of 7.30 points, settling at 19,989.05.

The broader market picture was even grimmer, with all indices witnessing a significant decline after outperforming the Sensex and Nifty for the past couple of weeks.

August inflation data, profit booking

One contributing factor to this lack of momentum appears to be the cautious stance of investors due to rising volatility, particularly in anticipation of the release of August inflation data later in the day.

Given that inflation reached a 15-month high in July, concerns persist that it may remain elevated in August, potentially dampening market sentiment.

Additionally, profit booking by investors, following Nifty’s recent milestone of crossing the 20,000 mark, could also be contributing to the current weakness in the market.

At around 10:25 am, heavyweight sectoral indices such as Nifty Bank, Nifty Auto, and Nifty Financial Services were trading in negative territory. Only Nifty IT and Nifty Pharma managed to maintain positive ground.

Despite the prevailing weakness, analysts remain cautiously optimistic about the Nifty’s prospects.

Deven Mehata, a research analyst at Choice Broking, highlighted the Nifty’s pivotal position, stating, “Nifty is currently teetering near a crucial breakout level at 20,000. A successful close above this level could generate significant momentum, potentially setting targets at 20,200 and 20,400 for Nifty.”