South Korea’s KOSPI plunged more than 10 per cent on Tuesday, briefly triggering a circuit breaker, and the shockwaves were felt acutely in Mumbai — dragging the Nifty 50 down 278.80 points, or 1.16 per cent, to close at 23,824.10, while the Sensex shed 893.39 points to settle at 76,200.68.
Both benchmark indices closed near their day’s lows after a session that began on a flat note before selling intensified sharply in the second half. The broader market followed suit, with the Nifty Midcap 100 falling 1.05 per cent to 62,070 and the Nifty Smallcap 100 declining a comparatively modest 0.48 per cent to 18,805, suggesting selective buying at lower levels in smaller stocks.
The IT sector bore the brunt of the selling, declining more than 2 per cent, after brokerages Jefferies and Morgan Stanley flagged softer demand trends following a weaker-than-expected outlook from Accenture. The selloff was compounded by broader concerns over AI-related valuations in U.S. equities spilling across global markets. Nifty Metal was another major laggard, falling as much as 3 per cent, tracking a drop in global metal prices. PSU Banks and Media also ended significantly lower. Pharmaceutical and healthcare stocks bucked the trend, attracting defensive buying after reports emerged that the U.S. FDA had approached Indian drug manufacturers through the Indian Drug Manufacturers’ Association to address a shortage of ifosfamide injection, a chemotherapy drug used in the treatment of multiple cancers.
India VIX rose over 9 per cent to around 14, signalling heightened near-term market volatility.
“The weakness was largely led by metal and IT stocks, while pharma continued to show relative resilience,” said Ajit Mishra, SVP – Research, Religare Broking. “The index is now approaching a crucial support zone in the 23,750–23,650 range, which coincides with the 20-day EMA and a recent gap area. Sustaining above this zone will be critical for the resumption of the prevailing gradual uptrend.”
Vinod Nair, Head of Research at Geojit Investments, noted that “most sectoral indices ended in red, with metals recording the sharpest decline due to falling global prices and demand concerns.” He added that “the domestic IT sector also remained under pressure, reflecting the global tech rout and persistent concerns over AI-led disruptions.”
On the currency front, the Indian rupee weakened by around 15 paise, or 0.15 per cent, to trade near 84.76 against the dollar, as the Dollar Index strengthened above the 101 mark, putting pressure on emerging market currencies. The expected near-term trading range for USD/INR is 94.40–95.25.
In commodities, spot gold slipped below $4,100 per ounce, extending a selloff driven by the dollar touching 13-month highs and hawkish Federal Reserve repricing. CME FedWatch now places roughly an 80 per cent probability of a rate hike by October, up from around 40 per cent before last week’s Fed meeting. Kaynat Chainwala, AVP – Commodity Research, Kotak Securities, said “gold prices are likely to remain under pressure as traders cautiously await May core PCE, GDP data, and speeches by Fed officials for fresh direction on the rate outlook.” Crude oil also remained under pressure, with Brent slipping below $77 per barrel and WTI below $73 per barrel, as diplomatic progress on the U.S.-Iran front continued to erode the geopolitical risk premium. A U.S. Treasury authorisation permitting Iranian crude sales for a 60-day window added further downside weight.
Technically, the Nifty’s repeated failure to sustain above the 100-day EMA at 24,150 remains a key concern. Immediate support lies at 23,800, and a break below that could accelerate the decline toward 23,600. On the upside, 24,000–24,100 is the immediate resistance zone. Looking ahead, Siddhartha Khemka of Motilal Oswal said Indian equities are expected to “trade sideways with a marginal negative bias in the near term amid weak global cues, continued FII outflows, and uncertainty surrounding the proposed U.S.-Iran ceasefire.” Key triggers to watch include the U.S. core PCE print, GDP data, Fed speeches, and next week’s Non-Farm Payrolls — any upside surprise on inflation could reinforce higher-for-longer rate expectations and extend pressure on both equities and gold.