Sensex Slips 700 Points From Day’s High on Sept 05: 3 Major Reasons Dragging The Market Lower

The Indian stock market started Friday’s session on a positive note. Investors were hopeful about GST 2.0 reforms, and this pushed Sensex and Nifty higher in early trade. However, this optimism did not last long. 

As the session progressed, selling pressure increased, and by mid-day both benchmark indices slipped into the red. At that point, the Sensex was down 0.32% and Nifty dropped 0.14%, falling sharply from the day’s highs.

1. Sectoral pressure drags the markets lower

The biggest reason for the market’s decline was weakness in key sectors. Realty and IT stocks led the fall, with both Nifty Realty and Nifty IT indices losing nearly 2% each. FMCG shares also came under profit booking after a strong five-day rally, which dragged the FMCG index down by 1.55%. 

Other sectors such as pharma, PSU banks, energy, infrastructure, and metals were also trading weakly, though their losses were smaller compared to IT, realty, and FMCG. This broad sectoral weakness pulled the overall market sentiment down.

2. Broader markets show signs of caution

The weakness was not limited to frontline indices. The broader market also reflected caution. Both the Nifty Midcap 100 and the Nifty Smallcap 100 slipped around 0.15%. 

Similarly, on the BSE, midcap and smallcap indices were also down, with the BSE Midcap index declining by 0.22% in intraday trade. Investors have been concerned about high valuations in these segments, and this worry weighed on mid and small-cap stocks, adding further pressure on the markets.

3. Global and domestic worries ahead of Q2 earnings

Another major reason for the market decline is the growing caution among investors ahead of Q2 FY26 earnings. Global concerns such as persistent US tariffs have raised fears about India’s export performance. 

At the same time, foreign portfolio flows remain volatile, creating further uncertainty. On the domestic side, while mutual funds have been strong buyers, with inflows of more than ₹70,500 crore into equities in August, this support has not been enough to offset the nervousness caused by global and valuation-related worries.

Also Read: Kalyan Jewellers Net Profit Rises 48.6% to ₹264 Crore!

Conclusion

The Sensex slipping 700 points from its intraday high highlights how fragile investor sentiment is at present. The combination of sectoral weakness, nervousness in mid and smallcaps, and both domestic as well as global concerns ahead of the earnings season weighed heavily on the markets. While strong mutual fund inflows may help cushion the fall, investors remain cautious as valuations are high and global headwinds continue to loom large.

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