Sensex tumbles nearly 600 pts, Nifty set to snap 3-day gaining streak. 5 triggers behind the decline

Benchmark indices Nifty and Sensex look set to snap a three-day winning streak, trading with sharp losses on Thursday. All major sectoral indices were in the red during afternoon trade, except the PSU Bank index, which bucked the broader trend. The Nifty Smallcap index fell by over 1%, while the midcap index declined by around 0.5%.

The BSE Sensex slipped as much as 568 points or 0.6% at 83,250, while the Nifty 50 declined 173 points, or 0.6%, to the day’s low of 25,603. Here are 5 factors behind the fall on February 5.

1.) Metal selloff

Metal stocks were among the top losers, with the sectoral index falling 1.5% as global metal prices declined. The drop came amid a stronger dollar, which made commodities more expensive for holders of other currencies. In today’s session, metal majors such as Hindustan Zinc, Vedanta, Hindustan Copper, NALCO, Hindalco, and NMDC tumbled up to 7%. Silver tumbled 10% today, while gold was down 3%. International copper prices settled over 3% lower.

2.) Profit Booking

Markets were on a strong run largely aided by the India-US trade deal earlier this week, where both indices gained over 2% each. “The Nifty appears to be in a consolidation phase without big moves at the index level. However, there are big changes within the Nifty stocks with big declines in IT stocks consequent to the IT sell off in the US spreading to India, too. The sell off has been triggered by Anthropic’s new automation tools that the market fears may replace IT services that are presently outsourced. The market fears significant margin pressure for Indian IT companies. What the real impact will be remains to be seen,” V K Vijayakumar, Chief Investment Strategist at Geojit Investments said.

3.) US, Asian stocks decline

U.S. markets ended lower on Wednesday, dragged by sharp declines in technology heavyweights such as Advanced Micro Devices and Palantir, as investors turned cautious over elevated valuations and the durability of the AI-led rally. The S&P 500 fell 0.51% to 6,882.72, while the Nasdaq dropped 1.51% to 22,904.58. The Dow Jones Industrial Average, however, bucked the trend and rose 0.53% to close at 49,501.30.

Asian equities mirrored Wall Street’s weak tech sentiment on Thursday, with regional markets sliding amid concerns over rising AI investment costs that triggered a rotation out of technology stocks. A fresh decline in silver prices also pressured leveraged positions already under strain. MSCI’s broadest Asia-Pacific index outside Japan tumbled 1.8%, led by a 3.9% plunge in South Korea’s KOSPI. Taiwan’s benchmark fell 1.1%, though financials and real estate stocks outperformed. Japan’s Nikkei slipped 0.7%, even as healthcare, real estate and utilities posted gains.

4.) Caution ahead of RBI MPC

– Markets remained in wait-and-watch mode ahead of the Reserve Bank of India’s monetary policy outcome. The six-member Monetary Policy Committee, chaired by RBI Governor Sanjay Malhotra, started its deliberations on Wednesday, with the policy decision scheduled for Friday morning. An SBI study expects the central bank to keep interest rates unchanged.

5.) Sensex expiry

Markets witnessed heightened volatility on Thursday as the Sensex derivatives expiry kept traders on edge. Expiry sessions typically see increased activity as market participants unwind, roll over or square off positions, often leading to sharp intraday swings in benchmark indices. The spike in volumes and rapid position adjustments can exaggerate price moves, making markets more reactive to even minor triggers during the session.