Indian indices slip as profit taking and IT sell-off weigh on market

Indian equity benchmarks retreated on Monday after earlier gains, with the Sensex down 402.01 points at 80,597.39 and the broader Nifty slipping 141.80 points to 24,844.60. The decline followed a sharp rally over the previous seven sessions that saw the indices rise about 10.5 percent.

Market participants cited profit booking at elevated levels as a primary catalyst. "After a sharp weekly advance and a subdued Muhurat trading session, the market enters the new week facing a key test of momentum, with investors likely to weigh the scope for further gains against the prospect of near-term profit-taking," said Ponmudi R, CEO of Enrich Money.

IT stocks led the sell-off, with the Nifty IT index down 1.3 percent as heavyweight firms fell after reports that a bipartisan US Senate bill could accelerate the expansion of AI data centres and power infrastructure. The proposed legislation raised concerns that faster AI infrastructure growth in the United States could heighten competition for Indian firms in AI-driven technology services and data-centre work.

All ten constituents of the Nifty IT index traded lower; Mphasis fell around 3 percent, while HCL Technologies, Infosys, Coforge and TCS each dropped between 1 and 2 percent.

Technical analysts noted the possibility of mean reversion. "We will keep the 24,860-24,775 as the downside marker, as long as above which, upside attempts may be expected, eying 25,400-25,700," said Anand James, chief market strategist at Geojit Investments.

Among gainers, Divi's Laboratories rose 4.6 percent after reporting a 64 percent year-on-year increase in quarterly profit, lifting the Nifty Pharma index by 1.6 percent.

In the special Muhurat trading session on Sunday, the Sensex closed at 80,999.40 and the Nifty at 24,986.40, both marginally lower after profit taking.