Amid heightened market volatility, benchmark indices ended lower on Wednesday due to weak global cues and persistent macroeconomic concerns. The key highlight of the session was the sharp decline in IT stocks, which dragged the markets lower, while banking shares provided significant support and helped the benchmarks recover from intraday lows.
The Sensex, after opening gap-down, extended its decline during the first half of the session to hit an intraday low of 73,492.60, down 1,157.24 points or 1.55%, largely weighed down by IT stocks. However, value buying in banking shares during the second half helped erase a substantial portion of the losses. The index eventually settled at 74,346.17, down 303.67 points or 0.41%.
Similarly, the Nifty declined 332.05 points or 1.41% intraday before closing at 23,405.60, down 77.95 points or 0.33%.
“Domestic markets witnessed a swift recovery from initial losses despite escalating Iran–US tensions. The rebound was primarily driven by a sharp recovery in banking stocks, while IT shares emerged as the biggest laggards due to profit booking and persistent global uncertainties,” said Vinod Nair, Head of Research, Geojit Investments.
Expectations of supportive policy measures to boost foreign investment aided sentiment. PSU banks outperformed their private-sector peers, supported by relatively stronger credit growth trends. However, investors remain cautious ahead of the upcoming RBI policy decision and GDP data, which are expected to provide greater clarity on growth prospects amid the risk of inflationary pressures stemming from geopolitical tensions, Nair added.
Developments in US–India trade negotiations and broader geopolitical dynamics could also influence near-term market direction, he said.
“While sentiment remains weak due to the sharp depreciation of the rupee and the resulting FII outflows, investors will closely watch the upcoming monetary policy announcement later this week, along with the RBI’s outlook on economic growth and inflation, especially in light of the weak monsoon forecast,” said Ankur Punj, MD & Business Head, Equirus Wealth.
The Nifty IT Index was the worst-performing sectoral index on Wednesday, plunging 5.57%—its biggest single-day fall in four months—amid renewed concerns over AI’s impact on the software sector. The index erased nearly two-thirds of the 7.64% gains it had accumulated over the previous three sessions.
All constituents of the IT index ended in the red, with TCS, Persistent Systems, LTIMindtree, Coforge and Tech Mahindra emerging as the top losers, each declining more than 5%. The American depositary receipts (ADRs) of Infosys and Wipro slumped 4.3% and 2.04% respectively (at IST 7:35 pm) as global IT sell-off extended for second day.
The combined market capitalisation of the 10-member Nifty IT Index eroded by Rs 1.5 lakh crore on Wednesday, wiping out most of the Rs 1.71 lakh crore gains recorded during the previous three sessions.
Besides IT, realty, FMCG and consumer durables were among the top sectoral laggards. In contrast, PSU banks and private banks emerged as the leading gainers, rising 1.70% and 0.70%, respectively.
Market breadth remained negative, with 2,395 losers against 1,813 gainers on the BSE. Broader markets traded mixed, with the BSE MidCap index declining 0.45%, while the BSE SmallCap index posted a modest gain of 0.12%.
Foreign portfolio investors sold shares worth Rs 5,616.56 crore ($586.83 million), while domestic institutional investors purchased shares worth Rs 5,740.89 crore, according to provisional data from the BSE.
