Sensex, Nifty today: Why stock market is falling on New Year's eve

Benchmark indices Sensex and Nifty tumbled around 1 per cent on New Year's eve, thanks to an overnight fall in US stocks and weakness across Asia, as investors globally chose to take some profit off the table amid stretched valuations and geopolitical uncertainty.

The BSE Sensex fell 687.34 points to hit a low of 77,560.79. Nifty tested the sub-23,500 level and was later trading at 23,460.45, down 116.55 points or 0.49 per cent. The selling was largely led by IT names. Tech Mahindra Ltd fell 3.23 per cent to Rs 1,690.25. TCS tanked 2.55 per cent, Zomato slipped 2 per cent while HCL Tech declined 1.55 per cent. BFSI stocks such as Bajaj Finance and IndusInd Bank also fell 1 per cent each.

Adani Wilmar tumbled 7.19 per cent to Rs 305.80 after the Adani group decided to exit from the Wilmar JV for $2 billion. Shares of Easy Trip Planners Ltd (EaseMyTrip) tumbled 9 per cent in Tuesday's trade amid reports co-founder and promoter Nishant Pitti was looking to sell his remaining 14 per cent stake in the company for about Rs 780 crore. The scrip fell 9.51 per cent to hit a low of Rs 15.42 on NSE. The counter logged a turnover of Rs 127.43 crore on NSE so far.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said markets are moving into the New Year with caution since uncertainty is high and valuations are stretched. The high US bond yield and strong dollar will ensure that FPIs will continue to sell on every rise, he said.

"DII buying will not be strong enough to take the market much higher. The fact is that even the DIIs and HNIs don’t have the conviction to accumulate stocks, except in certain pockets of fair value. Conviction to accumulate stocks will emerge only when macro indicators suggest recovery in growth and earnings," Vijayakumar said.

The analyst said investors must watch out for the Q3 results starting from January 1oth to identify companies reporting good numbers despite the growth slowdown.

Shruti Jain, Chief Strategy Officer at Arihant Capital Markets in a BT Markets Survey said higher valuations and slowing earnings, could lead to a range-bound market for the first three months of 2025, with a recovery driven by underlying earnings growth expected later.

"Given India’s strong structural growth, we believe the Indian economy and markets will continue to perform well, despite some headwinds," she said.