Nifty, Sensex settle deep in the red — factors that caused the markets' fall today

All sectoral indices on the NSE ended in the negative.

Losses in financial services and information technology stocks contributed the most to today’s sell-off.

With investors taking some money off the table, equities witnessed a sell-off. Meanwhile, foreign investors flocked to have- asset dollar, pushing the dollar index to a five-week high.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.20 percent to 108.38.

The dollar index jumped after a US Federal Reserve official indicated that the central back would maintain its hawkish stance ahead of the Jackson Hole Symposium in Wyoming on August 25-27.

Nervousness ahead of the symposium, was another factor contributing to the market fall today.

Nilesh Shah of Kotak AMC pointed out that the global scenario does not look too good.

He told CNBC-TV18 — echoing the US Fed official's take — that the markets will be mindful of the fact that the US Fed and other central bankers may try to be hawkish at Jackson Hole.

Further, action ahead of the monthly expiry of futures and options contracts this week kept investors on the edge.

“Markets respond to liquidity and a lot of liquidity was sucked out today from the Indian markets by FIIs based out of Mauritius,” pointed out Suman Bannerjee, CIO, Hedonova, an alternative investment fund firm investing in alternative assets such as NFTs, Crypto and P2P lending.

Meanwhile, Kush Ghodasara, an independent market expert, said,  “Today we saw short covering at 17,600 and 17,500 puts for August 25 expiry, while on the call side, heavy writing was seen from 17,600 to 17,900 strike price”.

He added, “But longs were seen at 17,000 strikes prices too, which suggests that the markets are heading for the 17,000-mark with 17600 as strong resistance for next three days."

Shah believes, “Now, the market has to take a little bit of respite and even correct a little bit. This will be driven by a variety of factors”.

Firstly, the recently earnings for June quarter are marginally below expectations, driven mainly by some large stocks; the overall breadth of the earnings has been positive. "So clearly, the market has discounted the breadth of the earnings, but it probably has to discount some disappointments in larger names driven in the automobile or in oil marketing companies," he said.