Indian benchmark indices witnessed sharp losses in afternoon trade on Tuesday, with the BSE Sensex declining 893.39 points or 1.16% to 76,200.68 and the NSE Nifty50 falling 278.80 points or 1.16% to 23,824.10 as of provisional closing data. According to latest reports, the market selloff eroded approximately ₹4.61 lakh crore in investor wealth as the market capitalisation of BSE-listed companies fell to around ₹475 lakh crore. The decline marked the index's biggest single-day fall in nearly four weeks, coming amid weak global cues, including a tech-led selloff and a sharp fall in South Korea's Kospi, which fell as much as 10% triggering a circuit breaker. Sectoral breadth remained weak as selling pressure intensified across IT, metals, banks and financials, with Nifty IT emerging as the biggest laggard, reflecting weakness in technology and commodity-linked stocks. The broader market also remained under pressure, with the BSE MidCap Select index dropping 0.99% and the SmallCap Select index falling 0.50%, suggesting selective buying at lower levels in smaller stocks. Market breadth was particularly weak with 1,497 stocks advancing and 2,790 declining out of 4,447 shares traded on the BSE, with the NSE's India VIX surging 8.6% to 13.9, signalling heightened investor anxiety about near-term market movements.
Information technology stocks came under renewed selling pressure on Tuesday after witnessing a temporary recovery on Monday following last week's sharp decline. Shares of TCS, Infosys, and Wipro each fell over 3% as concerns intensified over AI-driven disruption and a slowdown in technology spending. The renewed weakness followed Accenture's decision to lower the upper end of its annual revenue growth forecast, reviving concerns about subdued discretionary spending by global corporations. Infosys emerged as the biggest laggard, closing 3.42% lower, while Wipro and TCS also declined 3.21% each, with the Nifty IT index ending more than 2% lower. The selling pressure was further intensified by Foreign Institutional Investors (FIIs), who continued to reduce their exposure to Indian equities, offloading shares worth ₹635.91 crore on Monday. The IT sector bore the brunt of the selling, declining more than 2%, 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 US equities spilling across global markets, with the Nasdaq down more than 1.4% in mid-session following an overnight sell-off in US tech stocks.
The market decline was significantly influenced by South Korea's Kospi plunging more than 10% on Tuesday, with the selloff severe enough to briefly trigger a circuit breaker, prompting the Korea Exchange to suspend trading for 20 minutes. Investors rushed to lock in gains in major semiconductor stocks amid concerns that valuations had become excessive following the market's strong run-up. SK Hynix tumbled more than 12% and Samsung Electronics fell nearly 13%, with sentiment towards technology stocks deteriorating further after weakness in US tech shares during Monday's session. The continued uncertainty over the US-Iran peace talks outcome also acted as an overhang on the benchmarks, with markets remaining cautious about geopolitical developments and their potential impact on oil prices and shipping activities through the Strait of Hormuz. According to Sriram Velayudhan, senior vice-president at IIFL Capital Services, the global sell-off in tech stocks coinciding with the weekly expiry added to the volatility, with market participants preferring to take profits after the decent move seen over the past few weeks. "South Korea and Taiwan have been Asia's best-performing markets so far this year, driven by the rally in the AI-linked stocks-the hot favourite of investors worldwide," Velayudhan noted, adding that the strength in the US dollar on expectations that the US Fed may tilt towards interest rate hikes to combat inflation also kept the market under pressure.
Concerns over US Fed rate hikes emerged as a key factor, with CME FedWatch now placing roughly an 80% probability of a rate hike by October, up from around 40% before last week's Fed meeting. Higher US interest rates have implications for emerging markets such as India, as rising Treasury yields can attract foreign capital toward US assets, potentially leading to outflows from Indian equities. The Indian rupee weakened by around 15 paise, or 0.15% to trade near 94.7300 against the dollar, as the Dollar Index strengthened above the 101 mark, putting pressure on emerging market currencies. The Indian rupee finished marginally lower on Tuesday, closing at 94.7300 per US dollar compared with its previous close of 94.6300, marking a decline of 0.1% as changing expectations regarding US monetary policy pushed the dollar to a one-year high against a basket of major currencies. Investors are increasingly factoring in the possibility of a more hawkish Federal Reserve and a faster pace of policy tightening under new Fed Chair Kevin Warsh. According to CME Group's FedWatch tool, futures markets are pricing in a 54% probability of at least two 25-basis-point rate hikes before the end of the year, up sharply from 15.2% a week earlier.
Technical analysts suggest caution for Wednesday's session as bears remain in control after Tuesday's steep correction, with the benchmark indices forming a strong bearish candle on the daily chart reflecting aggressive profit booking after the recent upmove. According to Choice Equity Broking's Hitesh Tailor, the sharp decline from the day's high and close near the lower end of the session suggests sellers remained in control throughout most of the trading day. The Sensex closed at 76,200.70, down by 893.40 points (-1.16%) after opening marginally lower at 77,086.05 and touching an intraday high of 77,194.85 before witnessing sharp selling pressure. Sector-wise, selling pressure was visible across most sectors, with Information Technology, Focused IT, PSU Banks, Consumer Discretionary, Oil & Gas, Industrials, Consumer Durables, Realty, Services, Utilities, and Auto emerging as major laggards, while Private Banks, Top 10 Banks, Healthcare, Telecommunication, and Bankex showed relative resilience. Choice Equity Broking notes that the overall market bias has turned cautiously negative in the short term following the sharp correction, with immediate resistance placed around 77,100–77,300 and support at 76,000–75,800 levels. As long as Sensex holds above the 75,800–76,000 support zone, the broader structure remains stable, though traders should remain stock-specific and watch for stability near key support levels before adopting aggressive long positions. According to Vipin Kumar, AVP - derivatives and technical research at Globe Capital Market, the bias was negative on Tuesday amid a sharp decline in the South Korean market, but Nifty remained in the range of 23,800-24,240 levels, so no major decline is anticipated until it breaches the lower band. If the index breaks below 23,800, the selloff could intensify, while the derivative data indicates that options are slightly oversold and could rebound to 24,000, with the positional bias remaining sideways in the near term.
Thirteen of the 14 constituents of the banking index were trading lower during the session, as reported by Moneycontrol. Canara Bank emerged as the top loser, falling more than 3 percent, while Bank of Baroda and IDFC First Bank declined 2.5 percent and 2.11 percent, respectively. Among other major banking stocks, HDFC Bank, Yes Bank, State Bank of India and ICICI Bank were down by up to 1 percent. However, defensive sectors led the upside with pharma, healthcare, midcaps and realty showing selective buying amid broader market caution. Syrma SGS Technology emerged as a notable gainer, rallying 3.05% after the company entered into an agreement with Kaga Electronics India to develop EMS manufacturing facility in India through a joint venture, with Syrma SGS holding a 60% stake in the venture. Network People Services Technologies surged 5.54% after receiving an order from a Maharatna PSU to develop a UPI Third-Party Application Provider application. Info Edge (India), the parent company of Naukri, surged after announcing investments of ₹4,900 crore across 135 startups with a portfolio now valued at ₹41,300 crore, translating to a 8.4x multiple on invested capital and a gross internal rate of return of approximately 33%. Emcure Pharmaceuticals jumped 1.55% to ₹1,818.80 after a foreign brokerage reiterated its 'Buy' rating and raised its target price to ₹2,100 from ₹1,970. Vedanta tumbled 7.73% after promoter entity Twin Star Holdings was looking to offload up to 6.5 crore shares through block deals at a floor price of ₹291 per share, representing a discount of about 4.9% to Vedanta's previous closing price. At the sectoral level, except for pharma and healthcare, all sectoral indices ended lower, with the Nifty Metal index sliding 3.2%, while the Nifty PSU Bank and IT indices fell around 2% each, and Bank Nifty declined 1.3%. The Nifty Midcap 150 and Nifty Smallcap 250 indices declined 1% and 0.6% respectively, with the two indices having gained 2.2% and 5.7% over the past week respectively.
