The equity markets turned volatile on Tuesday, August 4, as investors took a breather after the sharp gains recorded in the previous session. The Sensex traded largely flat, while the Nifty 50 slipped below the 24,600 mark as selling emerged in several heavyweight stocks. Investors remained cautious ahead of the Reserve Bank of India’s policy decision, while crude oil prices, foreign fund flows and global cues continued to influence sentiment.
The market opened on a cautious note after the Nifty’s strong 1.6% jump on Monday. The benchmark index had closed at 24,774.30 after gaining more than 390 points, while the Sensex had surged 544 points to settle at 78,639. Tuesday’s session, however, saw investors booking some profits following the recent rally.
The divergence between the two benchmark indices was also notable. While the Sensex managed to hold close to the previous close, the Nifty came under pressure and moved below 24,600. Traders were also assessing the unusual volatility witnessed towards the end of Monday’s session following the introduction of the new Closing Auction Session mechanism.
The new system is intended to improve price discovery during the closing phase of trading. However, its first session resulted in significant late-day movements in the Nifty, prompting investors to remain cautious about interpreting Monday’s sharp gains. Market participants are now watching whether the recent rally can sustain once the impact of the new mechanism settles.
Among individual stocks, KEI Industries was one of the notable gainers, rising around 7% after the company reported strong June-quarter results. Its consolidated profit increased about 40% year-on-year, while revenue rose 23%. The numbers encouraged buying in the cable and wire maker, making it one of the stronger performers in the broader market.
Ather Energy also witnessed strong buying interest, with its shares rising sharply after the electric two-wheeler maker reported an improvement in its quarterly performance. The company’s loss narrowed to around ₹51 crore, giving investors some confidence about its path towards profitability.
On the losing side, Life Insurance Corporation of India (LIC) shares came under heavy selling pressure. The stock declined sharply after the government announced an offer for sale of a 6.5% stake in the insurer. The issue was priced at a discount to the prevailing market price, putting pressure on LIC shares during the trading session.
DLF was another prominent loser, with its shares falling around 2%. The decline followed the real estate company’s quarterly results, which showed a sharp fall in revenue. While the numbers weighed on the stock, analysts continued to maintain a relatively positive long-term view, supported by expectations of new project launches and sustained demand in the residential real estate market.
The broader sectoral picture remained mixed. Realty and IT stocks were among the major areas of weakness, while cement stocks also faced selling pressure. The IT sector, which had participated strongly in Monday’s rally, saw some profit booking. Banking, FMCG, pharma and healthcare stocks also traded on the weaker side, although the extent of losses varied across individual counters.
Metal stocks, meanwhile, offered some support to the market. The relative strength in the sector helped limit the broader decline, although investors remained selective rather than making broad-based purchases.
Another major factor influencing the Indian stock market was crude oil. Oil prices had fallen sharply in the previous session after hopes of diplomatic progress between the United States and Iran reduced concerns about a prolonged disruption to global supplies. Brent crude had declined nearly 5%, while West Texas Intermediate also recorded a steep fall.
For India, lower crude prices are generally positive because the country depends heavily on imports to meet its energy requirements. A sustained decline in oil prices could ease inflationary pressures, improve the current account balance and reduce the pressure on the rupee. It could also benefit sectors such as aviation, paints, chemicals and automobiles.
However, investors remain alert to developments in the Middle East. Any renewed escalation between the US and Iran could push crude prices higher again and quickly alter the market outlook.
Foreign investor activity is another factor being closely tracked. Foreign institutional investors have recently returned to the buying side in the cash market, helping trigger short covering and supporting large-cap stocks. Continued foreign inflows could provide an important cushion for Indian equities, particularly at a time when valuations remain a concern in some pockets of the market.
Investors are also awaiting the RBI monetary policy decision, which could provide fresh direction to interest-rate sensitive sectors. Market participants will watch the central bank’s assessment of inflation, economic growth, liquidity and the global environment.
For the Nifty, analysts are closely watching the 24,500 level as an immediate support zone, with 24,300 emerging as another important level. A sustained recovery above 24,800 could bring the 25,000 mark back into focus, while a decisive break below support could lead to further consolidation.
Overall, Tuesday’s session reflected a market taking a pause after a strong run. The combination of corporate earnings, crude oil movements, foreign fund flows, RBI policy expectations and global geopolitical developments is likely to keep the Sensex and Nifty volatile in the near term. With investors becoming more selective, individual stock performance could increasingly depend on earnings and company-specific developments rather than broad market momentum alone.