Equity benchmarks reversed sharp early losses but still ended lower on Wednesday as buying in and financial stocks helped markets recover from intraday lows, even as persistent weakness in IT shares continued to weigh on sentiment.
Concerns around geopolitical tensions, elevated crude oil prices, foreign fund outflows and fears of AI-led disruption in the technology sector kept investors cautious, while near-term market direction is expected to hinge on the RBI policy outcome, crude oil movement and global developments.
BSE ended 303.67 points or 0.41 per cent lower at 73,492.60 (recovering from the day’s low of 74,346.17). NSE settled 77.95 points or 0.33 per cent lower at 23,405.60, hitting a low of 23,151.50.
Vinod Nair, Head of Research at Geojit Investments, said investors remained cautious ahead of the policy decision and GDP data. He added that developments in India-US trade negotiations and geopolitical uncertainties are likely to dictate near-term market direction.
In today’s session, from the previous close amid concerns surrounding US-Iran negotiations, rising oil prices, a weakening rupee and a steep sell-off in IT stocks. Benchmarks remained weak through the first half of the session; however, strong buying interest emerged at lower levels during the second half, helping the indices recover sharply from the day’s lows and recoup a significant portion of intraday losses.
The rebound was led by banking and financial stocks, where domestic institutional investors stepped in aggressively.
The volatility index was up 6 per cent. The broader market also mirrored the benchmark recovery. Midcap and smallcap indices rebounded strongly from intraday lows. Nifty Midcap 100 slipped 0.42 per cent and Nifty Smallcap 100 dipped 0.11 per cent. Nifty Smallcap 250 outperformed and closed flat.
Banking stocks outperform, IT remains under pressure
On the sectoral front, Nifty PSU Bank emerged as the top-performing index, followed by Nifty Private Bank. Meawhile, Nifty IT remained under heavy pressure throughout the session, declining 5.5 per cent and ending as the worst-performing sectoral index. Nifty Realty also closed among the top laggards.
The sharp decline in IT stocks came after a strong rally over the previous three sessions, triggering significant profit-booking across the sector.
TMPV & Apollo shares lead gainers; TCS, Tech Mahindra top laggards
Among the Nifty 50 constituents, Apollo Hospitals, TMPV, IndiGo, Max Healthcare and SBI emerged as the top gainers, while TCS, Tech Mahindra, HCLTech, Infosys and Wipro were the major laggards. during the session, before settling 8.39 per cent lower.
Persistent Systems and Coforge were the major losers of the Nifty Midcap index, ending 6-7 per cent lower.
Market breadth remained weak. A total of 298 stocks out of the Nifty 500 universe ended in the red. Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, said.
Hariprasad K, SEBI-registered Research Analyst and Founder of Livelong Wealth, stated, “Concerns around a higher-for-longer US interest rate environment, softer tech spending trends, and the long-term impact of AI-led automation on traditional outsourcing models continued to weigh on sentiment. The sharp decline in TCS highlighted that institutional investors remain cautious despite valuations becoming increasingly attractive.”
He further said that the session reflected the resilience of domestic liquidity, with buyers repeatedly emerging near key support levels despite heightened global uncertainty.
“At the same time, sector rotation remains intense, with investors selectively allocating capital toward areas offering stronger earnings visibility, while reducing exposure to sectors facing structural headwinds,” he added.
RBI policy, global trade concerns in focus
Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services, said investors remain focused on the RBI’s meeting, with the policy decision outcome scheduled for Friday.
Markets largely expect the RBI to maintain the repo rate at current levels.
He noted India’s Services PMI increasing in May extends support to the domestic growth outlook, driven by healthy business activity and strong demand conditions.
Khemka also flagged renewed concerns around global trade after the US proposed additional tariffs of up to 12.5 per cent on imports from 54 countries, including India.
“Going ahead, the recent declining market highlights the increasing sensitivity of domestic equities to geopolitical developments, with investors closely tracking energy prices, ongoing US-Iran negotiations, Foreign Institutional Investor flows, movements in the rupee and the decisions of RBI’s Monetary Policy Committee meeting,” he said.
In Asian markets, Japan’s Nikkei 225 and Shanghai’s SSE Composite ended in positive territory. Hong Kong’s Hang Seng index declined. South Korean markets were closed.
European markets were trading mostly lower.
On Tuesday, US markets ended in positive territory.
FIIs offloaded equities worth ₹8,362.92 crore, exchange data showed. On Tuesday, Sensex settled 382.50 points or 0.52 per cent positive at 74,649.84. Nifty was up 100.95 points or 0.43 per cent at 23,483.55.