Sensex falls 372 points, Nifty slips below 23,950: What dragged the stock market lower today?

The equity benchmark indices BSE Sensex and NSE Nifty ended lower on Monday (June 29), snapping their two-day gaining streak, as losses in heavyweight stocks and banking shares weighed on investor sentiment.

The Sensex fell 372 points to close at 76,728, while the Nifty declined 110 points to end at 23,946, slipping below the 23,950 mark. The Nifty Bank index underperformed, dropping 450 points to 57,727, while the Nifty Midcap index lost 228 points to 61,567.

Here are five factors behind Monday's market decline:1. Heavyweight stocks drag benchmarks

Reliance Industries, Mahindra & Mahindra, Larsen & Toubro, Axis Bank and Maruti Suzuki were among the biggest drags on the Nifty, pulling the benchmark lower and ending its two-session winning streak.

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2. Banking shares underperform

The Nifty Bank index was the worst-performing major index, with Kotak Mahindra Bank falling more than 3% after Managing Director Ashok Vaswani sought to step down.

3. Auto stocks lead sectoral losses

The Nifty Auto index emerged as the top losing sectoral index, with all constituent stocks ending lower except Bharat Forge. In contrast, the Nifty Metal and Nifty Pharma indices bucked the broader market trend to close as the top gainers.

4. Persistent Systems and Astral tumble

Persistent Systems dropped more than 11% after announcing the acquisition of a 21% stake in Germany-listed Nagarro SE. Astral fell 8% after announcing the demerger of its chemicals business and following a JPMorgan downgrade.

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5. Weak market breadth

Selling remained broad-based, with the NSE advance-decline ratio at 1:2, indicating that declining stocks significantly outnumbered advancing ones.

Among individual stocks, Transrail Lighting gained more than 1% after securing new orders worth ₹459 crore, while Hexaware Technologies rose 5% after becoming an Anthropic authorised reseller for Amazon Bedrock.

Persistent Systems, Astral, Supreme Industries, HPCL and PI Industries were the top losers in the midcap segment.

Gurmeet Chadha, Managing Partner & CIO, Complete Circle, on Persistent Systems, said, "Persistent Systems today is reacting to the Nagarro acquisition news. It's an AI world, and the market expects more use of cash towards AI and data centre-related plays.

This is again more of an IT services play. But the catch here is that what they're acquiring is in the digital engineering space, which I think has a lot of potential and is a subset of this entire AI super-capex cycle that we are seeing.

At some point, I still think the valuations are a little rich, considering that other large-cap IT companies are available at around 13 times, versus Persistent at 30–32 times. But maybe below ₹4,000 we would be tempted to have a look, because this company has shown great execution. Especially when the entire sector has been in a bit of turmoil, they've maintained high margins."

From the Sensex basket, Max Healthcare Institute Ltd, Dr Reddy's Laboratories Ltd, Eternal Ltd, NTPC Ltd, Trent Ltd and Hindalco Industries Ltd were the major gainers.

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Kotak Mahindra Bank Ltd, TVS Motor Company Ltd, Mahindra & Mahindra Ltd, Maruti Suzuki India Ltd, InterGlobe Aviation Ltd and Eicher Motors Ltd were the biggest laggards.

Gurmeet Chadha, Managing Partner & CIO, Complete Circle, on markets, said, "Market-wise, as you rightly said, I think the India balance sheet and macros continue to improve. You know, I've not seen bank credit growth at 18.5% for a very long time. I think the last time I saw it was in 2012 or 2013, if my memory is right. I think with oil coming back to $70 to $73, the concerns on the fiscal front and some concerns on the current account deficit, to a large extent, get addressed.

But the market somehow doesn't seem to be reflecting it. That can happen in the short run. One concern was the macro getting damaged in India and the government balance sheet getting damaged. I think, to a large extent, that is now getting repaired. So we are looking at some opportunities in oil-sensitive. In autos, I think there is too much concern regarding the monsoon."