Sensex falls 500 points, Nifty below 22,400. What can trigger a sharp rally on Dalal Street?

After opening higher, the Indian stock market reversed course and fell sharply on Monday as a mix of headwinds and tailwinds kept investors on edge.

At 11.15 AM, the Sensex had dropped over 500 points to 72,917 while the Nifty 50 had shed over 100 points to trade below 22,400 Sensex had opened over 400 points higher before quickly reversing course and wiping out its opening gains. Broader markets remained in the green, with Nifty Midcap 100 and Nifty Smallcap 100 indices rising up to 1%.

Shares of Tata Steel, Trent, BEL, M&M, Bajaj Finance, Power Grid, Eternal and NTPC gained up to 2% to lead gains on Sensex, while Tech Mahindra dropped around 4% to lead losses.


Among the sectors, Nifty Auto and Nifty Metal gained more than 1% each, while Nifty PSU Bank and Nifty IT slipped nearly 1% each. The overall market breadth remained positive, with NSE seeing 2,177 advances against 930 declines, while 109 stocks remained unchanged.

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What lies ahead for Dalal Street?

The market is going through a stage wherein external headwinds are dominating the domestic tailwinds, said V K Vijayakumar, Chief Investment Strategist, Geojit Investments. He noted that elevated crude prices and high US bond yields will continue to impact the market. FIIs will continue to sell in the near-term and DIIs will continue to absorb the FII selling. This is the likely near- term market scenario, according to the analyst. “The million dollar question is how this scenario plays out and where will the market be, say, a few months from now?”

Vijayakumar noted that the external headwinds and sustained FII selling have made India one of the worst performing markets this year with a negative return of nearly 14% in 2026 so far. The sharp correction has made valuations fair and, in many segments, attractive, he said, adding that this, along with the impressive GDP growth estimate of 7.1% for FY27 and improving corporate profitability, provides strong fundamental support to the market.

“Therefore, investors can accumulate fairly-valued growth stocks ignoring the uncertainty and volatility in the market. For investors with a medium-to-long-term investment horizon, this market provides value buying opportunities. Patience is the key. If crude declines sharply following favourable developments in the Middle East, the market can rally significantly from the current levels,” he said.

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Technical levels for Nifty

Going forward, the 22,350–22,330 zone could act as immediate support for Nifty, according to Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities. He noted that a decisive move below this zone could trigger renewed selling pressure towards 22,200.

On the upside, the 22,660–22,680 zone, coinciding with the 10-day EMA, could act as an immediate hurdle, according to the analyst who feels that a sustained move above this zone could trigger short covering and extend the pullback towards 22,820. Despite the recent recovery, confirmation through sustained buying remains necessary, he warned.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.