The equity markets in India witnessed a sharp decline on Thursday, as the benchmark indices Sensex and Nifty pared their early gains amid significant volatility. This downturn came on a day marked by profit booking coinciding with the expiry of futures and options contracts. By approximately 10.50 am, the Sensex had fallen by 24.66 points, or 0.033 per cent, settling at 74,584.32, while Nifty saw a modest increase of 14.55 points, or 0.062 per cent, reaching 23,427.15.

Earlier in the trading session, the Sensex had surged by 470.82 points, or 0.63 per cent, achieving an intraday high of 75,079.80. Similarly, the Nifty had risen by 176.60 points, or 0.75 per cent, at one point climbing to 23,589.20. The market’s fluctuations were primarily influenced by investor sentiment and sectoral movements, which contributed to the volatility.

Sectoral performance indicated significant weakness in IT, auto, realty, and oil & gas stocks. The Nifty Smallcap100 index reported a decline of 0.6 per cent, whereas the Nifty Midcap100 index recorded slight gains. Shares of major companies such as HCL Technologies, Tech Mahindra, and TCS dropped by as much as 2.5 per cent, while Cipla and Adani Enterprises emerged as the top gainers, rising up to 7 per cent.

Key Factors Behind Market Fluctuations

Profit booking appeared to be a significant reason for the market corrections. Investors capitalised on previous session gains after the Sensex and Nifty closed higher by 0.1 per cent each on Wednesday, following a substantial drop of nearly 4 per cent over the prior four sessions. Rising crude oil prices and a call for austerity measures by Prime Minister Narendra Modi reportedly heightened investor concerns.

Foreign Institutional Investors (FIIs) also contributed to the overall market decline, having sold equities valued at Rs 4,703.15 crore on Wednesday alone. This trend has continued throughout the year, leading to a net outflow of approximately Rs 1.94 lakh crore from Indian equities. Such persistent selling from FIIs significantly impacts market liquidity and exerts downward pressure on benchmark indices.

The depreciation of the Indian rupee has compounded market frustrations, opening at 95.86 against the US dollar, a record low. This decline occurred amid rising crude oil prices and geopolitical tensions in West Asia. The currency has weakened over 6 per cent against the dollar since the conflict in the region began, making it the worst-performing currency in Asia for 2026. In response to protect foreign exchange reserves, the Indian government increased import duties on gold and silver from 6 per cent to 15 per cent.

Sector-Specific Insights and Future Expectations

The IT sector has been particularly affected, extending its losses for the fourth consecutive session. The Nifty IT index decreased by 1.7 per cent, with all ten of its constituents trading lower. Overall, the index has seen a decline of nearly 7 per cent over the last four sessions, reflecting persistent selling pressure.

Moreover, the rise in global crude oil prices has added further complexity to the domestic market landscape. Brent crude increased by 0.34 per cent to reach USD 106 per barrel, posing inflationary pressures and raising concerns about corporate earnings and growth prospects for India, which relies heavily on imported oil.

Market analysts note that the continuation of Wednesday’s recovery hinges on achieving key benchmarks, with indications that a close above 23,680 could signal strength. Conversely, a dip below 23,300 might expose lower levels, particularly around 22,800. Such market indicators will be closely monitored by investors in the days to come.

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