The markets on Monday fell the most in 10 weeks as investors booked profits on the back of weak global cues and foreign brokerages cutting price targets for index heavyweight Reliance Industries (RIL).

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The benchmark Sensex lost 229.48 points, or 1.21%, to close at 18708.98, while the Nifty too closed down by 70.95 points at 5676. This is the largest daily fall for Sensex since July 23, 2012, when the index had fallen 281.09 points.

Vikas Khemani, president and head - institutional equities at Edelweiss Securities, attributes the fall to profit booking, coming as it does after the sharp rally seen over the last few weeks.

The Sensex had run up nearly 6% — from 18021 to 19058 — in three weeks before correction set in on Friday.

The stock of RIL, which fell 4.51%, contributed to more than a third of the Sensex fall after Morgan Stanley downgraded the stock to underweight, citing valuations, lack of near-term triggers and expectation of weaker refining and petrochemical margins. Even JP Morgan has gone underweight on the stock with  a price target of Rs675.

To top it all, realtor DLF, in the eye of a storm over links to Robert Vadra, tanked over 7%.

Negative Asian market cues, along with poor opening in European markets, also weighed on Indian markets.  

Karun Mutha, senior vice-president and head - equity & derivatives advisory at HSBC Invest Securities, said some amount of index futures selling by FIIs has also started. “On Friday, they were net sellers in index futures and buyers of call options, indicating some sort of profit booking. This was the first time we saw FIIs selling index futures in the last one month,” he said.

The market breadth was quite negative, with 12 out of 13 sectors closing in the red. Realty, oil & gas and capital good stocks fell the most.

However, analysts believe the trend remains positive and  the markets have support  around 5600 Nifty levels.

“The trend is likely to remain positive for Indian markets in the near term,” said Khemani.

Mutha concurs. “Though volatility is going to increase in the coming sessions due to the upcoming corporate earnings season, markets are likely to hold 5600-5630 levels, where there is high accumulation of puts,” he said.