Indian Equity Markets Continue Decline for Third Consecutive Day

India's equity markets extended their decline for a third consecutive session on Tuesday, dragged down by broad-based selling pressure and profit booking at elevated levels. Weak global cues, lingering geopolitical tensions, and currency market volatility—fueled by a softening US dollar—further dampened investor sentiment, deepening the downturn.

Despite a positive opening, market sentiment turned weak in the second half. The Nifty 50, after hitting an intraday high of 24,845, settled at 24,542.50, down 174 points or 0.70%, from the previous day's closing. The BSE Sensex mirrored similar trends, closing the day with a loss of 636 points, or 0.78%, at 80,737.51. The benchmarks have fallen by about 1.4% each in the past three sessions.

The broader indices showed a mixed trend — the smallcap index closed almost flat, while the midcap index lost nearly half a per cent. Sectorally, most indices closed in the red. The Nifty Realty index was the outlier, gaining 1%, supported by continued investor interest in housing and commercial real estate segments amid favourable demand dynamics.

Vinod Nair, Head of Research at Geojit Investments, said that profit booking is evident across sectors, except for real estate stocks, supported by expectations of an interest rate cut by the RBI. “Mid- and small-cap stocks are experiencing relatively less consolidation than large caps due to better earnings growth and moderation in premium valuation. While short-term consolidation is likely to persist, strong domestic oriented players are estimated to provide outperformance against external volatility,” added Nair.

Ajit Mishra, SVP of Research at Religare Broking, said that the ongoing foreign fund outflows, coupled with weak global cues such as geopolitical tensions and uncertainty over trade deals, are adding pressure to the markets. Bajaj Broking noted that the Nifty index has formed a bear candle signaling profit booking at higher levels as the index failed to sustain above 24,800 and gave up its initial gains to close near the low. “The index in the process closed below the 20 days EMA for the first time since 15th April 2025. We expect the index to extend the last 15 sessions consolidation in the range of 24,400–25,080 zone,” added the brokerage.

Among the individual stocks, shares of Adani Group firms fell up to 2.5% on Tuesday following a Wall Street Journal report which stated that US prosecutors were investigating whether Adani group companies imported Iranian LPG into India through their Mundra port in Gujarat. An Adani spokesperson called the report 'baseless and mischievous'.

The Indian rupee erased Monday’s gains amid risk-averse sentiments, a rebound in the US dollar, and foreign fund outflows. Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, said that the rupee traded weak by 16 paise at 85.53 as the dollar index saw a minor jump near the 99 mark, while selling pressure in secondary markets added further weakness to the currency.

Dilip Parmar, Senior Research Analyst at HDFC Securities, said that the local currency has been consolidating within a narrow range over the past five days, awaiting fresh triggers, most notably the upcoming RBI policy announcement. He added that in the near term, the spot USD/INR is expected to trade between 85.10 and 85.90.