Stock Market Fall: What caused the Nifty drop on Monday and what are some key levels ahead?

India’s equity markets continue to remain under pressure with the Nifty 50 index declining as much as 1% or over 200 points on Monday. With this fall, the index also broke below the 22,800 level, which was a strong support for the index over the last eight to ten trading sessions.

A break of the key technical support is one of the biggest factors behind the fall on the Nifty on Monday. Along with the Nifty, the broader markets, the Nifty Midcap and Smallcap index are also down over 1% each.

Another key factor behind the fall on Monday is the weak handover from Wall Street on Friday, on worries of a slowing economy and the Fed officials being in no mood to cut down on interest rates until the inflation does not fall back to the 2% mark.

Two important events are lined up on Wall Street this week, which happens to be a truncated one for Indian markets courtesy of a holiday on Wednesday on the occasion of Maha Shivratri. One of which is the results of Nvidia Corp. and the other being the Personal Consumption Expenditure (PCE) data on Friday, which is the Fed’s preferred inflation gauge.
In the recent fund manager survey from Bank of America, India emerged as the second least-favoured Asian market. China, which was the least favourite in January, has sprung up to third place.

The Hang Seng has been an outperformer so far in 2025 among global equities, even outperforming its peers on Wall Street.

Valuations are another concern. MSCI China is currently trading at 12 times earnings, despite a 13% surge so far this year. MSCI Brazil trades at a 9 times multiple despite a 15% surge. On the flip side, MSCI India, despite a 5% drop until Friday, trades at 24 times earnings.

Sameet Chavan of Angel One had said on Friday that 22,700 – 22,400 zone will be a crucial one for the Nifty. While this will increase volatility and concerns, he advised refraining from being aggressively short in the market.

HDFC Securities’ Nagaraj Shetti had also mentioned that the underlying trend of the Nifty remains choppy and a break below 22,700 will result in opening of downside towards 22,450 levels, which is the 20-month Exponential Moving Average in a quick period of time. Immediate hurdle on any bounce is at 23,000 – 23,100.

The Nifty is currently trading with losses of over 200 points at 22,584.