4 reasons why Sensex shed 600 pts, Nifty slipped below 25,900 on Thursday

The Sensex, Nifty slipped on Thursday on account of profit-taking as benchmark traded near record high levels coupled with volatility owing to Sensex monthly expiry.

The Indian equity benchmark indices were seen quoting with notable losses in trade on Thursday despite a US Fed rate cut and renewed buying interest by foreign institutional investors.  FIIs have net bought shares worth ₹7,500 crore thus far in October, thus are likely to reverse their last three month selling streak.  At close, the BSE Sensex was down 593 points or 0.6 per cent at 84,404; after having hit an intra-day low of 84,313 in Thursday's trade. Whereas, the NSE Nifty 50 index shed 176 points or 0.7 per cent as it settled at 25,878.  Among the top Sensex losers - Bharti Airtel dipped 2 per cent. Bajaj Finance, Power Grid Corporation, Bajaj Finserv, Infosys, Tech Mahindra, Tata Steel, NTPC and Reliance Industries were down over 1 per cent each.  CATCH STOCK MARKET LATEST UPDATES LIVE 

Here are 4 key reasons why stock markets are down on Thursday:

US Fed cuts rate, but cautions on Dec policy

  The US Federal Reserve on Wednesday cut interest rates by 25 basis points (bps) to 3.75 per cent, but distinctively highlighted that any further cuts in next December meeting was not a done deal.  The US Federal Reserve governor Jerome Powell said it will focus on balancing risk in the US economy; with future policy decisions depending on the evolving outlook and data.  "The Fed move to reduce the policy rates is supportive but not aggressive, suggesting a balanced approach rather than a pivot to sustained easing. It is positive for growth and risk assets, but unlikely to trigger a strong "risk-on" rally unless data on labour and inflation situation to improve.", said Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities.  The analyst says that it expects the Reserve Bank of India (RBI) to consider a rate cut at its early-December meeting, provided domestic inflation remains contained and global financial conditions stay supportive. 

Profit-taking as Sensex, Nifty near life-time highs

  Analysts also believed that today's market action was on account of profit-taking as the benchmark indices had gained over 5 per cent so far this month, and were seen nearing life-time highs.  At current levels, the Sensex and the Nifty were less than 2 per cent shy from the record highs of 85,978 and 26,277 registered in September 2024. 

Subdued cues from Asian peers

  The US President Donald Trump reduced tariffs on Chinese imports to 47 per cent from 57 per cent following a meeting with Chinese President Xi Jinping in South Korea.  Despite lower US tariffs on Chinese goods and a rate cut trading sentiment remain tepid in Asian markets.  China's Shanghai Composite was down 0.7 per cent. Hang Seng, Straits Times and Singapore benchmarks slipped around 0.3 per cent each; while Nikkei and Kospi rose up to 0.3 per cent on Thursday. 

Sensex monthly F&O expiry

  The Sensex October derivatives expire today. The Sensex Put-Call-Ratio (PCR) ratio stood at 0.7 - implying presence of larger number of open interest (OI) in Sensex Calls versus Puts.  According to the BSE, highest OI in Sensex Calls was seen at the 85,000 Strike followed by 84,600 and 84,500 Strikes. On the other hand, highest OI in Puts was visible at 84,400 and 84,300 Strikes.