Benchmark stock market indices recovered sharply from their intraday lows on Wednesday after reports suggested the government may consider measures to attract foreign investments and support the rupee. However, a sharp sell-off in information technology stocks and rising crude oil prices kept the market in negative territory.
The S&P BSE Sensex ended 303.67 points lower, or 0.41%, at 74,346.17, while the NSE Nifty50 fell 77.95 points, or 0.33%, to close at 23,405.60.
Vinod Nair, Head of Research, Geojit Investments Limited, said, “Domestic markets witnessed a The rebound was primarily driven by a sharp recovery in banking stocks, while IT stocks emerged as the biggest laggards due to profit booking and persistent global uncertainties.”
He added, “Expectations of supportive policy measures to boost foreign investments aided sentiment. PSU banks outperformed their private 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 further clarity on growth challenges amid the risk of inflationary pressures stemming from geopolitical tensions.”
The recovery was significant considering the sharp fall seen during the session. The Sensex had plunged to an intraday low of 73,190.13, nearly 1,460 points below its previous close of 74,649.84, before recovering more than 1,150 points. Similarly, the Nifty slipped to 23,151.50 during the day before recouping over 250 points from its low.
Markets have now fallen in five of the last six trading sessions as investors continue to grapple with geopolitical tensions, rising prices, foreign investor outflows and concerns over economic growth.
The late-session recovery was triggered by reports that the government may be considering measures to support the rupee, attract foreign bond investors and review long-term capital gains tax provisions.
These reports raised hopes that policymakers could take steps to improve foreign investor sentiment at a time when overseas investors have pulled out record amounts from Indian equities.
The rebound was most visible in banking stocks, which recovered substantially from their intraday lows and helped limit the overall decline in benchmark indices.
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The Nifty IT index plunged 5.57%, marking its worst single-day decline in four months and making it the worst-performing sectoral index by a wide margin.
The sell-off came after a strong rally in recent sessions. The IT index had gained 7.6% over the previous three trading sessions as investors cheered artificial intelligence-driven spending optimism and attractive valuations.
However, Wednesday saw aggressive profit booking across the sector.
Tata Consultancy Services (TCS) emerged as the biggest loser on the Sensex, crashing 8.43%. Tech Mahindra plunged 6.23%, HCL Technologies fell 5.25%, and Infosys dropped 3.82%.
Among broader IT stocks, LTIMindtree fell 7%, Persistent Systems declined 5.21%, Coforge lost 4.92%, Mphasis dropped 3.51% and Oracle Financial Services Software (OFSS) fell 1.74%.
The correction also mirrored weakness in overseas-listed shares. Infosys ADR had fallen 2.5% overnight after rallying 11% over the previous four sessions. Wipro ADRs dropped more than 8% after surging 25% in eight trading sessions, signalling profit booking in technology stocks globally.
Apart from profit booking, investors also remain concerned about the long-term impact of artificial intelligence on traditional IT services businesses and India’s limited exposure to direct AI beneficiaries compared with markets such as the United States, Taiwan and South Korea.
Even after the recent rally, the Nifty IT index remains down 22.4% so far in 2026.
Another major concern for investors was the sharp rise in crude oil prices.
Brent crude climbed 2.29% to $98.20 per barrel, while WTI crude surged 2.57% to $96.17 per barrel as hostilities in the Gulf intensified and diplomatic efforts between Washington and Tehran showed little progress.
Higher oil prices remain a major concern for India, the world’s third-largest crude oil importer.
Rising crude prices increase inflation risks, widen the current account deficit and put pressure on corporate margins, making investors cautious about the economic outlook.
The Indian rupee also weakened sharply, falling 0.46% to 95.7050 against the US dollar.
While IT stocks dominated the losers’ list, a few stocks managed to end higher.
IndiGo was the top gainer, rising 1.57%, followed by State Bank of India which gained 1.43%. ICICI Bank climbed 1.30%, Trent rose 1.13%, and Power Grid Corporation advanced 1.01%.
On the losing side, TCS led the declines with a fall of 8.43%, followed by Tech Mahindra at 6.23%, HCL Technologies at 5.25%, Infosys at 3.82%, and ITC at 2.21%.
Sectoral performance remained mixed.
Apart from the sharp fall in Nifty IT, Nifty Realty declined 1.39%, Nifty Media fell 0.59%, and Nifty FMCG lost 1.01%.
Banking stocks helped stabilise the market. Nifty PSU Bank rose 1.70%, Nifty Private Bank gained 0.70%, Nifty Healthcare advanced 0.54%, and Nifty Financial Services added 0.32%.
Broader markets also remained under pressure, with the Nifty Midcap 100 falling 0.42% and the Nifty Smallcap 100 declining 0.11%.
India VIX rose 6%, indicating continued nervousness among investors.
Investors will now focus on the Reserve Bank of India’s monetary policy decision, GDP growth data, crude oil prices and developments in the Iran-US conflict.
Any signs of easing geopolitical tensions or supportive policy measures could help stabilise sentiment. However, sustained foreign outflows, rising oil prices and continued weakness in IT stocks remain key risks for the market.
(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.)