Indian equities have suffered a brutal ₹16.77 lakh crore wealth erosion over four trading sessions, with the BSE Sensex plunging 1,456.04 points (1.92%) on Tuesday to close at 74,559.24. According to The Times of India, the benchmark index has dropped 3,399.28 points (4.36%) over the four-day period, bringing total market capitalisation down to ₹4,56,02,981.70 crore ($4.77 trillion). Market breadth remained severely weak with 3,412 stocks declining versus only 869 advancing on the BSE, while the BSE MidCap Select index tumbled 2.92% and the SmallCap Select index declined 2.73%. Among Sensex constituents, major losers included Tech Mahindra, Adani Ports, HCL Technologies, Tata Consultancy Services, Titan Company, and Bharat Electronics, with State Bank of India emerging as the sole gainer.
Vinit Bolinjkar, Head of Equity Research at Ventura Securities, has issued a strong sell call on IT stocks, warning that the sector faces structural headwinds from the global AI infrastructure shift. Speaking to ET Now, Bolinjkar outlined three key risks — an ongoing oil supply disruption, a structural shift in the technology sector driven by artificial intelligence, and continued selling by foreign institutional investors — that are reshaping India's investment landscape. "The sell-off will continue, margins will compress, there will be pressure on revenues and we will have to let go of talent," he said, adding that all three factors make IT stocks unattractive from a long-term perspective. The trigger, he notes, is the accelerating rollout of AI-led initiatives by global technology companies, which is beginning to structurally reduce demand for traditional IT services. Bolinjkar advised investors to book profits and avoid IT counters at current levels.
India's weight in the MSCI Emerging Markets Index has declined to around 12% by May 2026 from peaking at nearly 21% in September 2024, as reported by The Economic Times. This dramatic shift reflects India's severe underperformance compared to global peers, with Taiwan emerging as the largest constituent at approximately 25%, overtaking China. China and South Korea currently hold weights of about 19% each. Over the same period that India's MSCI index declined 16% in dollar terms, China's Shanghai Composite rose 50%, Taiwan's market gained 77%, and South Korea's Kospi surged 124%. As per The Economic Times, India gave around 9% return in 2025 in dollar terms, the worst relative underperformance versus emerging market peers in three decades. Kanchan from Anand Rathi Share and Stock Brokers noted that markets of this quality and size do not stay in that position indefinitely, with the underperformance itself creating conditions for reversion.
The oil supply disruption from the Hormuz Strait crisis is creating mounting pressure on India's fiscal deficit through under-recoveries, with oil prices likely to stay above the ₹100-per-barrel mark. According to Vinit Bolinjkar of Ventura Securities, the actual price India pays for crude is significantly higher than Brent or WTI benchmarks suggest, with the consequence being mounting pressure on India's fiscal deficit through under-recoveries and the possibility of a retail fuel price hike. If prices are not raised, the rupee could come under further stress. With markets already forming lower lows on weekly charts, Bolinjkar said a retest of previous monthly lows cannot be ruled out if the Hormuz situation deteriorates further. Foreign portfolio investors (FPIs) saw record outflows of ₹1.8 lakh crore in FY26, with experts expecting FII return to be heavily skewed towards H2 FY27. The rupee fell sharply from ₹85.6 per dollar in April 2025 to ₹94.65 in March 2026, with Brent crude crossing $110 per barrel as India imports 85% of its crude, simultaneously widening the current account deficit and pressure the rupee further.
The recent stock market crash, now stretching into its fourth session, has been triggered by a combination of adverse global and domestic developments weighing heavily on investor confidence. Bears argue that India is the most expensive emerging market with a 'Buffett Indicator' (Market Cap to GDP) crossing 100%, making any shock to liquidity cause a 'mean reversion'. They point to the 2013 'Taper Tantrum' as a precedent where Indian markets underperformed for a year after US yields spiked. However, bulls argue that the 'India of 2024' is not the 'India of 2013', with Domestic Institutional Investors (DIIs) and retail SIP inflows of over ₹19,000 crore per month providing a massive floor to the market. The 'Fear Gauge' or India VIX has begun to creep up, signaling that the period of low-volatility gains is officially over. Technical analysts expect volatility to remain elevated in the short term, with the near-term outlook remaining bearish to cautious as sustained selling pressure and weak sentiment continue to dominate market direction. Experts believe that three preconditions must be met for FII return: de-escalation of the West Asia conflict, cooling of Brent crude prices, and stabilisation of the rupee against the dollar.
