Sensex down 500 points: Why is stock market falling

 

Stock markets slipped on Tuesday, ending a three-day rally that followed the announcement of the India-US trade deal. After the recent rise, investors turned cautious and booked profits, leading to a broad-based sell-off across sectors.

At 2:30 PM, the S&P BSE Sensex was down 569.43 points at 83,248.26. The NSE Nifty50 also declined, falling 164.50 points to 25,611.50. Both benchmark indices were down by over half a percent, showing clear pressure across the market.

The fall in the market was not limited to a few stocks. Selling was seen across large-cap, mid-cap, and small-cap stocks. This shows that investors were cautious after the recent rally and chose to lock in gains.

On the Sensex, Trent Ltd was the top gainer, rising 2.78%. Tata Steel Ltd was up 0.97%. Adani Ports and Special Economic Zone Ltd gained 0.27%, while State Bank of India Ltd added 0.22%. Bajaj Finance Ltd also opened higher, rising 0.19%.

On the losing side, Eternal Ltd saw the sharpest fall, slipping 3.02%. Bharat Electronics Ltd declined 1.71%. Bharti Airtel Ltd was down 1.66%. Kotak Mahindra Bank Ltd fell 1.43%, and InterGlobe Aviation Ltd dropped 1.39%.

WHY DID STOCK MARKET FALL TODAY?

Market experts say the fall is mainly due to profit booking after the recent three-day rally. Investors chose to sell at higher levels, leading to a pause in the upward move.

Kranthi Bathini, Director, Equity Strategy at WealthMills Securities Pvt Ltd, said markets are entering a consolidation phase. According to him, after the recent rally, some cooling off is natural.

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He said that markets are seeing profit booking at higher levels and are now moving into consolidation. He added that as long as the Nifty stays above 25,500, the medium to short-term direction remains positive. He also said the market structure still supports buying on dips during rallies.

BROADER MARKETS REMAIN WEAK

In the afternoon session, broader markets stayed under pressure. The Nifty Midcap 50 fell 0.24%, while the Nifty Midcap 100 slipped 0.29%. Small-cap stocks saw deeper losses, with the Nifty Smallcap 100 declining 1.43% and the Nifty Smallcap 50 dropping 1.69%.

India VIX, which measures market volatility, was slightly lower and fell 0.14%, showing that while markets were weak, panic selling was not visible.

Among the broader indices, the Nifty 100 eased 0.53%, the Nifty 200 fell 0.49%, and the Nifty 500 declined 0.54%. Most sectoral indices were also in the red.

Sector-wise, Nifty Auto slipped 0.43%, Nifty Financial Services 25/50 fell 0.55%, and Nifty FMCG declined 0.32%. Nifty IT was down 0.43%, while Nifty Media eased 0.09%. Nifty Metal fell 1.03%, Nifty Pharma slipped 0.01%, and Nifty Private Bank declined 0.83%. Nifty Realty was down 0.70%, Nifty Consumer Durables fell 0.84%, and Nifty Oil and Gas eased 0.15%.

A few sectors managed to trade higher. Nifty PSU Bank rose 0.21%, while the Nifty Healthcare Index gained 0.09%.

IT STOCKS UNDER PRESSURE

IT stocks continued to remain a key area of concern. The Nifty IT index had fallen nearly 6% in the previous session, and weakness continued today as the index was down nearly 1%.

This pressure is not limited to Indian IT stocks. Global technology stocks have also seen sharp falls due to concerns around artificial intelligence and automation.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the Nifty is currently in a consolidation phase, with no major moves at the index level.

He explained that while the index appears stable, there are sharp changes within Nifty stocks. IT stocks are seeing heavy selling after a sell-off in the US tech market spread to India. He said this sell-off has been triggered by new automation tools launched by Anthropic, which has raised fears that such tools may replace IT services that are currently outsourced.

According to him, the market is worried about possible margin pressure for Indian IT companies. However, he added that the real impact of these tools is still unclear and will be known over time.

DOMESTIC SECTORS SHOW RESILIENCE

Dr Vijayakumar also pointed out that while IT stocks are weak, domestic consumption-driven sectors are showing strength. He said this is reflected in the performance of leaders such as Reliance Industries Ltd, Bharti Airtel, major banks, and some auto stocks.

He said that after the growth-focused Budget and trade deals with the EU and the US, India's growth outlook remains strong. This is expected to support domestic consumption. He also noted that the low interest rate environment continues to support auto sales and may also help demand for products like air conditioners as summer approaches.

He added that if foreign institutional investors stop selling and move towards marginal buying, the market could gain further strength. This is one key data point investors are closely watching.

Overall, today's fall appears to be a pause after a strong rally, driven by profit booking, weakness in IT stocks, and mixed global cues, rather than a sharp change in the market's long-term direction.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

The Sensex fell over 500 points today, February 5, 2026, settling at 83,313, as the market entered a consolidation phase following the massive "India-US Trade Deal" rally earlier this week.

While the long-term outlook remains bullish (as noted by BlackRock's Larry Fink), today's slide was driven by a combination of global tech jitters and domestic caution.

5 Main Reasons for Today’s Fall

1. Profit Booking after the "Trade Deal" Surge

Earlier this week, the Sensex jumped over 4,000 points on news that the U.S. slashed tariffs on Indian goods from 50% to 18%. After such a parabolic move, institutional investors are "selling the news" to lock in gains.

2. The "AI Erosion" Scare in IT

Indian IT stocks (Infosys, TCS, Wipro) are facing heavy selling pressure. This follows a global tech sell-off and a recent report from Jefferies warning that new AI automation tools (like Anthropic’s latest agents) could erode the revenue of traditional IT application services. The Nifty IT index fell nearly 1% today after a 6% crash in the previous session.

3. Pre-RBI Policy Anxiety

The RBI Monetary Policy Committee (MPC) is currently meeting, with Governor Sanjay Malhotra set to announce the interest rate decision tomorrow, Friday, February 6. Investors are turning cautious, fearing a "hawkish" stance to protect the Rupee, which has been under pressure from a strengthening U.S. Dollar.

4. The Metal Meltdown

Metal stocks like Vedanta, Hindustan Zinc, and Tata Steel plummeted between 3% and 7% today. This is a direct spillover from the crash in gold and silver prices. As the "yellow metal" fell below $5,000 internationally, the valuation of mining and metal companies took a hit.

5. Technical Glitches at NSDL

Reports surfaced today regarding a technical disruption at the National Securities Depository Ltd (NSDL), which delayed the settlement of certain equity trades from earlier in the week. This created minor friction and dampened intraday sentiment.

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Market Snapshot (Feb 5, 2026)

Index	Closing Level	Change
Sensex	83,313.93	-503.76 (0.60%)
Nifty 50	25,642.80	-133.20 (0.52%)
India VIX	12.16	-0.67% (Low panic)

The "Silver Lining"

Despite the headline drop, the Nifty PSU Bank index actually ended in the green (+0.34%), and Consumer stocks like Hindustan Unilever and Trent (Zudio) saw buying interest as investors shifted from "high-growth tech" to "defensive value."

Would you like me to keep an eye on the RBI's interest rate decision tomorrow and let you know if they change the repo rate?

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