The relationship between negative news and profit booking in stock markets is driven largely by investor psychology. When adverse news breaks—whether global or country-specific—investors often fear potential declines in stock prices. Those holding profitable positions may sell (profit booking) to lock in gains before the market drops further. Meanwhile, other investors may sell to minimize potential losses, fearing the news could trigger a broader market downturn. This behavior reflects a mix of risk aversion and herd mentality, where uncertainty amplifies the desire to secure profits or avoid greater losses. Thus, negative news often sparks widespread selling

The negative news is a big reason for profit booking for the investors to limit the loss and or book the profit. Every coin has two sides so negative news can be propaganda marketing to bring the stock to the limelight. The second reason is that buying on deeps for fundamentally good stocks is the best strategy not to book profits on negative news.

A negative news event can trigger profit booking in the stock market as investors anticipate a potential decline in stock prices. To secure gains before the market reacts negatively, investors may sell their holdings, leading to increased selling pressure and potentially driving prices down further. This is often driven by fear, uncertainty, or expectations of reduced future returns.

some academic researches have establish positive correlation between negative news and drop in prices of several stocks or a particular stock. Current example, is Adani green and adani power. More than long term investor it is traders and short term investor that panic and loose confidence. some studies are :

• Study by Tetlock (2007): Found a statistically significant correlation between negative sentiment in financial news and subsequent drops in market prices.
• Research by Hameed & Ting (2000): Showed that bad news increases volatility, leading to profit booking by risk-averse investors.

Corona 19 and twitter buy out by Tesla owner led to tesla shares dip

First you have to define what is negative news. Is it compnay related or market and economy related . What is happening to alternate investment option like FED raising bond rates or interest rates.

Country like India inflation, politicians comments and speeches and frequent regulatory changes make market sentiment negative.

Unless negative news is defined one cant establish any cause and effect relationship. Low beta shares wont be affected much as also of world class swell managed brand companies and technology or market leaders. Unfortunately there is no mathematical model. You have to do longitudinal study for sufficient period of time to mark and then deduce about extent of impact by dividing severity in 3 categories of negativity like in Cancer or fatty liver .The study are always subjective and cant be converted into theory or law .Formula is not possible. The investors time horizon is important variable. One should see if there is any adverse development in company itself specially business model and demand . Otherwise changes are mostly temporary