Why the Market Gave Up Gains Today (4 Sep 2025): 5 Key Points

For investors and traders trying to understand Thursday's volatile session, the key question is: "Why did the Indian market surrender its strong opening gains to close almost flat?" After a powerful start driven by optimism over GST reforms, the benchmark indices performed a U-turn, weighed down by profit-booking linked to derivatives expiry and mixed global cues. This analysis breaks down the factors that caused the volatility, the day's top-performing sectors, and what it signals for the market.

Table of Contents

1. How Did the Stock Market Perform Today? A Tale of Two Halves
2. What Caused Today's Market Volatility?
3. Which Stocks and Sectors Were in Focus?
4. What Are Foreign and Domestic Institutions Doing?
5. How Are Global Markets Influencing Indian Sentiment?
6. Frequently Asked Questions (FAQs)

How Did the Stock Market Perform Today? A Tale of Two Halves

The market narrative on September 4, 2025, was a classic story of a strong start followed by a weak finish.

• The Start: The Nifty 50 opened strong, briefly crossing the 24,900 mark, and the Sensex surged to an intraday high of 81,456. This initial rally was a continuation of the positive momentum from the GST Council's announcements.

• The Finish: In the second half, the indices pared all their significant gains.

  • The S&P BSE Sensex closed at 80,718.01, up by a modest 150.3 points (0.19%).

  • The NSE Nifty 50 ended the day at 24,734.30, with a small gain of 19.25 points.

What Caused Today's Market Volatility?

The market's U-turn was primarily driven by two conflicting forces:

1. Initial Optimism from GST News: The day began on a high note, with investors cheering the GST Council's decision to cut the tax rate on 'namkeen' (savoury snacks) from 12% to 5%. This news acted as a positive trigger, causing stocks in the FMCG sector to surge.

2. Profit-Booking Due to F&O Expiry: The main reason for the market giving up its gains was the expiry of weekly Sensex F&O (Futures & Options) contracts. This event typically increases volatility as traders square off their positions, leading to significant profit-booking at higher levels.

Which Stocks and Sectors Were in Focus?

The day's trading saw clear winners and losers, with sentiment divided across different sectors.

• Top Gaining Sectors: The Nifty Auto and Nifty FMCG indices were the top performers, gaining between 1.5% and 2%. The rally was fuelled by positive GST news for both sectors.

• Top Losing Sectors: The Nifty IT, Nifty Metal, and Nifty Oil & Gas indices faced selling pressure and closed in the red.

Top Gaining and Losing Stocks on Nifty 50:

Top Gaining Stocks

Top Losing Stocks

The broader markets, however, held onto their gains better, with the BSE Midcap and Smallcap indices closing about 0.5% higher.

What Are Foreign and Domestic Institutions Doing?

The divergence between Foreign and Domestic Institutional Investor activity continues to be a key market theme. According to data from the previous session (September 3):

• Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth ₹1,666.46 crore.

• Domestic Institutional Investors (DIIs) were net buyers, providing strong support by purchasing equities worth ₹2,495.33 crore.

This pattern highlights that while foreign investors remain cautious, domestic funds are stepping in to support the market at lower levels.

How Are Global Markets Influencing Indian Sentiment?

Global cues were mixed, offering no clear direction to the Indian market.

• Asian Markets: Showed a mixed trend. Japan's Nikkei index rose by 1.36%, but Hong Kong's Hang Seng and China's Shanghai Composite fell significantly.

• European Markets: Opened higher, reacting positively to easing U.S. tariff risks.

• U.S. Markets: Stock futures were steady but cautious as traders awaited the crucial U.S. jobs report before making any major bets.

Frequently Asked Questions (FAQs)

Q1: Why did the Indian stock market fall from its day's high on September 4?
A1: The market surrendered its strong morning gains primarily due to increased volatility from the weekly Sensex F&O contracts expiry. This led to widespread profit-booking by traders at the day's higher levels.

Q2: Was there any positive news that impacted the market today?
A2: Yes, the GST Council's decision to cut the tax on savory snacks ('namkeen') from 12% to 5% was a major positive trigger. This caused stocks of snack companies like Bikaji Foods and Prataap Snacks to surge and boosted the overall FMCG sector.

Q3: Which were the best and worst-performing sectors today?
A3: The Nifty Auto and Nifty FMCG sectors were the best performers, gaining up to 2%. On the other hand, the Nifty IT, Nifty Metal, and Nifty Oil & Gas sectors were the worst performers, closing with losses.

Q4: What is F&O expiry and why does it cause volatility?
A4: F&O expiry is the last day on which futures and options contracts for a particular period must be settled. On this day, traders must either close out or roll over their positions, leading to a surge in trading volumes and price swings, which increases market volatility.

Q5: What are FIIs and DIIs doing in the market?
A5: Based on the data for September 3, FIIs continued to be net sellers, pulling money out of the market. In contrast, DIIs acted as a supportive force, buying equities and absorbing the selling pressure from foreign investors.