Stock market’s struggle deepened on Tuesday, with the Sensex falling more than 550 points and the Nifty slipping below 23,650 as selling in private banks and large-cap stocks kept the benchmarks under pressure. Rising crude oil prices, continued uncertainty around West Asia and concerns over the broader market’s stretched valuations added to the cautious mood.
The BSE Sensex ended 555.23 points, or 0.73%, lower at 75,577.58. The index opened at 75,970.28 against Monday’s close of 76,132.81 and touched an intraday high of 76,012.11 before falling to a low of 75,553.35.
The Nifty 50 declined 144.05 points, or 0.61%, to end at 23,635.10. It opened at 23,743.10, touched a high of 23,758.95 and slipped to a low of 23,623.10.
The fall came even as some parts of the broader market remained resilient. Nifty 100 fell 0.40%, Nifty 200 declined 0.27% and Nifty 500 dropped 0.22%. In contrast, Nifty Midcap 50 gained 0.23%, Nifty Midcap 100 rose 0.20% and Nifty Smallcap 100 advanced 0.17%.
India VIX, however, declined 0.51% to 11.10.
The biggest external concern remained crude oil, with Brent rising 1.75% to $98.70 a barrel. WTI crude was up 2.78% at $94.02.
The rise in oil prices came amid continuing tensions in West Asia and concerns over energy flows. For India, which is heavily dependent on imported crude, sustained higher oil prices can increase the import bill and put pressure on inflation and corporate earnings.
The Nifty Oil & Gas index declined 0.67% on Tuesday. Reliance Industries fell 1.16%.
The pressure from crude prices is becoming more important as Brent approaches the psychologically significant $100-a-barrel mark. A sustained move above that level could further complicate India’s inflation and growth outlook.
Private banking stocks were among the biggest drags on the benchmark indices. The Nifty Private Bank index fell 0.98%, while Nifty Financial Services 25/50 declined 0.93%.
Nifty PSU Bank was also lower by 0.15%.
Among major banking stocks, ICICI Bank was the biggest loser in the Sensex pack, falling 2%. Axis Bank declined 1.72%, Kotak Mahindra Bank fell 1.20% and HDFC Bank dropped 1.11%.
The selling was not limited to financial stocks. Trent fell 1.28%, M&M declined 1.26%, UltraTech Cement dropped 1.23%, Tata Steel fell 0.75% and Asian Paints declined 0.76%.
IT stocks continued to weigh on the market, although the sector’s fall was smaller than Monday’s sharp decline.
The Nifty IT index fell 0.37%. Infosys declined 0.37%, TCS fell 0.50% and HCL Technologies dropped 0.23%.
The sector remains sensitive to expectations around US interest rates, after stronger-than-expected US jobs data raised concerns about a possible September rate hike by the Federal Reserve. Higher rates can affect corporate technology spending and demand for Indian IT services in the US market.
One of the key features of Tuesday’s session was the divergence between the benchmark indices and the broader market.
While the Sensex and Nifty remained under heavy pressure, mid-cap and small-cap indices ended higher. The Nifty Midcap 50 gained 0.23%, Nifty Midcap 100 rose 0.20% and Nifty Smallcap 100 advanced 0.17%.
The sectoral picture also showed pockets of strength. Nifty Pharma gained 0.77%, Nifty Healthcare rose 0.63%, Nifty MidSmall Healthcare advanced 0.90%, Nifty Chemicals gained 0.68% and Nifty 500 Healthcare rose 0.73%.
Nifty Auto gained 0.28%, Nifty FMCG rose 0.35%, Nifty Media advanced 1.31% and Nifty Metal gained 0.02%.
On the losing side, Nifty Realty fell 0.05%, Nifty Financial Services Ex-Bank declined 0.47%, Nifty Consumer Durables fell 0.24% and Nifty MidSmall Financial Services declined 0.15%.
Vinod Nair, Head of Research, Geojit Investments Limited, said the mid- and small-cap segments have delivered strong returns after hitting their 52-week lows earlier this year.
“Since the 52-week lows recorded in April for mid-caps and March for small-caps, these segments have delivered strong returns of 20–30%,” Nair said.
He attributed the rally to a recovery in domestic inflows and value buying after concerns around earnings downgrades eased.
“The rally was driven by a recovery in domestic inflows and value buying, as concerns over earnings downgrades—triggered by the 2025 global economic slowdown, high inflation, and geopolitical uncertainties like trade tariff eased,” he said.
However, the recent rise in crude oil prices is now creating a fresh challenge for the earnings outlook.
“Q1 results did point to improving corporate earnings, but sustaining this optimism may become challenging with crude oil prices breaching to $100 per barrel,” Nair said.
Nair cautioned that the strong outperformance of mid- and small-cap stocks may be difficult to sustain after their sharp gains over the past five to six months.
“While selective buying will remain, the ongoing elevated market volatility can persist in the near term, making it prudent for short-term investors to book partial profits,” he said.
He added that the sharp outperformance of mid- and small-cap stocks could lose momentum going forward.
“The sharp outperformance of mid- and small-cap stocks over the past five to six months may be difficult to maintain going forward,” Nair said.
Despite the weakness in the benchmarks, Nair sees an opportunity in large-cap stocks, particularly as their valuations have become more attractive relative to the broader market.
“From a strategic perspective, a greater focus on large-cap stocks and non-equity ETFs appears safer,” he said.
He also identified sectors that could provide some defensive support to portfolios.
“Sector-wise, defensive and deep-value areas such as Healthcare, Telecom, FMCG, Diversified businesses, and IT can continue to provide an edge to the portfolio,” Nair said.
Among the major Sensex stocks, BEL was the top gainer, rising 1.48%. Adani Ports gained 1.06%, Hindustan Unilever rose 0.84%, IndiGo advanced 0.49%, HCL Technologies gained 0.23% and Titan rose 0.22%.
SBI gained 0.20%, Eternal rose 0.19% and Tech Mahindra was up 0.12%.
On the losing side, ICICI Bank fell 2%, Axis Bank declined 1.72%, Reliance Industries dropped 1.16% and Trent fell 1.28%.
Sun Pharma declined 0.98%, Maruti fell 0.96%, Asian Paints dropped 0.76%, Tata Steel declined 0.75%, Bharti Airtel fell 0.71% and Tech Mahindra declined 0.73%.
HDFC Bank was down 1.11%, while Bajaj Finance, TCS, Power Grid, NTPC and ITC also ended lower.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)