Sensex falls over 500 points. Why is stock market falling today?

The main indices on Dalal Street opened on a weak note on Thursday, snapping their recent rally as global cues turned cautious. The Sensex fell over 500 points and the Nifty dropped more than 140 points in early trade, reacting to a pause in the global uptrend and renewed geopolitical calm following signs of a trade truce between the United States and China.advertisementAt around 9:47 am, the Sensex was down 516.75 points at 80,839.01 while the Nifty hovered at 24,528.25, down 142.25 points. The selloff, however, remained largely confined to heavyweight largecaps. The broader market showed surprising strength, with midcap and smallcap indices trading firmly in the green.US-CHINA TRADE TRUCE MAY HURT FII INFLOWSAccording to Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market appears to be entering a phase of near-term consolidation. The easing of tensions between Washington and Beijing has shifted the narrative, potentially triggering a tactical realignment of foreign institutional investor (FII) flows. A 'Sell India, Buy China' strategy is not off the table, he warned, which could take the wind out of the largecap rally.That said, he remains constructive on defence stocks, which saw renewed interest after the Prime Minister's endorsement of India's indigenous military hardware. While long-term prospects for Indian defence exporters remain promising, lofty valuations mean investors need to tread carefully.TECHNICAL INDICATORSadvertisementTechnically, the market trend remains evenly poised. The Nifty formed a small green candle on the daily chart in the previous session, hinting at cautious optimism. Analysts say a decisive break above 24,770 will be crucial for the index to resume its upward momentum towards the next resistance at 24,900. On the downside, support is seen around 24,550.Bank Nifty continues to oscillate within a flag pattern, with key support at 54,560 and resistance near 55,200. In the auto sector, Exide Industries is showing signs of a breakout after months of consolidation. Meanwhile, the energy sector appears to have confirmed its breakout above the 35,000-mark, with stocks like CG Power and Coal India building on their momentum.LOOK OUT FOR SPECIFIC SECTORAL STOCKSDespite the benchmark's softness, several thematic plays are unfolding on the charts. The metals pack continues to rally, with stocks such as Jindal Steel, SAIL, and Hindustan Copper moving out of their consolidation zones and confirming bullish breakouts.Public sector banks, too, are seeing positive price action. Union Bank of India has broken out of an Inverted Head and Shoulders pattern, signalling a potential trend reversal. Railway stocks are regaining momentum, with names like Ircon, RITES, RVNL, and Railtel setting up for continued strength through a range of bullish chart patterns including symmetrical triangles, consolidation breakouts and falling channel reversals.WHAT NEXT? advertisementWhile the shift in global sentiment may temporarily weigh on largecaps, particularly those that had outperformed on the back of FII buying, the underlying strength in mid and smallcaps remains intact. Breakout patterns across sectors such as defence, energy, metals and transportation suggest there are still plenty of opportunities for investors willing to look beyond the index.Investors should note that while the mood on Dalal Street may have turned cautious, but it's far from bearish.(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.)Tune InMust Watch

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