Markets retreat from record highs as profit-taking, weak global cues weigh on sentiment

India’s benchmark equity indices pulled back from early record highs on Monday as investors booked profits amid weak global trends, uncertainty over the interest-rate outlook and the rupee slipping to a new lifetime low.

The Sensex had climbed 452 points to an unprecedented 86,159 in early trade, while the Nifty touched a fresh peak of 26,325.80, surpassing the previous highs set on 27 November. However, by 11.45 a.m., both indices had reversed sharply. The Sensex dropped nearly 500 points from the session’s peak to 85,649.88, and the Nifty fell below 26,200 to 26,179.40.

Titan, Bajaj Finance and Sun Pharmaceutical were among the top drags on the Nifty50, slipping up to 1 per cent. Kotak Mahindra Bank and Adani Ports were the key gainers, rising as much as 2 per cent. Market breadth weakened, with 1,961 stocks advancing, 1,687 declining and 214 remaining unchanged.

The rupee depreciated to a record low of 89.76 against the US dollar, breaching its previous trough of 89.49 hit just two weeks earlier. The currency has fallen nearly 90 paise since 3 November, despite a strong second-quarter GDP print.

Robust GDP data dampened hopes of a near-term policy easing by the Reserve Bank of India. The yield on the benchmark 10-year bond rose to 6.52 per cent on Friday from 6.47 per cent, reflecting the market’s reassessment.

Barclays said it no longer expects a rate cut at the 5 December policy meeting, arguing that strong growth outweighs the effect of unusually soft October inflation. The brokerage anticipates a policy pause, albeit with a dovish tone and an upgraded growth outlook.

Dr V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the economy “doesn’t need a monetary stimulus when it is firing on all cylinders”, a view that has tempered market sentiment.

Asian markets traded lower, with the Kospi and Nikkei 225 in negative territory. US futures were also down by up to 1 per cent, pointing to a muted opening on Wall Street.

Foreign portfolio investors remained net sellers for the fourth time in five months, offloading equities worth Rs 3,795.72 crore on Friday. Continued FII outflows are typically negative for domestic markets.

Brent crude rose 1.62 per cent to USD 63.39 per barrel. Higher oil prices tend to weigh on India’s external and fiscal balances given the country’s heavy reliance on imports.

Despite the strong September-quarter growth, manufacturing activity softened in November, with the PMI falling to a nine-month low. HSBC analysts warned that GDP growth could slow markedly in the March quarter as the temporary GST-related consumption boost fades, government spending moderates and export demand weakens.

With agency inputs