Sensex, Nifty retreat from intraday highs as caution creeps back into markets
Indian equity benchmarks slipped from their intraday highs on Wednesday, reflecting a cautious undertone among investors after a recent rebound. The Sensex and Nifty saw profit-booking across select sectors, while continued selling by foreign institutional investors (FIIs) and renewed weakness in IT stocks weighed on sentiment.
At around 12:30 pm, the Sensex was trading at 85,540.14, down more than 200 points from the day’s high, while the Nifty 50 slipped below the key 26,200 mark to trade near 26,197. The pullback came after markets opened on a steady note, extending the pattern of range-bound movement seen over the past few sessions.
Market participants said the decline was not driven by panic selling, but rather by tactical profit-taking and lingering global uncertainties, especially around foreign flows and policy developments in the US.
Foreign investor selling resumes, limiting upside momentum
One of the key drags on market sentiment was the return of foreign institutional investor selling. According to provisional exchange data, FIIs sold equities worth ₹1,794.80 crore on Tuesday, marking the second consecutive session of net selling after a brief phase of buying earlier in the week.
Foreign flows have remained volatile in recent months, with investors recalibrating their exposure to emerging markets amid shifting global interest rate expectations and geopolitical uncertainties. Market experts noted that even modest FII selling tends to cap upside during low-volume or consolidation phases.
“Foreign flows continue to be an overhang for the market,” said a fund manager at a domestic mutual fund. “Whenever FIIs turn sellers, especially after a rally, the indices struggle to sustain higher levels.”
While domestic institutional investors (DIIs) have continued to provide support, their buying has not been strong enough to fully offset the pressure from overseas investors.
Also Read :
Profit-booking emerges in IT, pharma and energy stocks
Another factor behind the intraday decline was profit-booking in select heavyweight sectors, particularly IT, pharma and oil & gas. These sectors had contributed to recent gains and were natural candidates for trimming positions as indices approached resistance levels.
Key stocks that saw selling pressure included:
-
Sun Pharmaceutical Industries
-
Dr Reddy’s Laboratories
-
Select oil and gas counters
Most of these stocks slipped up to 1 percent, reflecting cautious sentiment rather than aggressive selling. Analysts said the market is currently in a “sell-on-rise” mode in pockets, as investors await stronger cues from earnings and global macro data.
The broader market tone also remained mixed, with sectoral rotation visible rather than broad-based participation.
IT stocks under pressure after US H-1B policy changes
Weakness in IT stocks played a significant role in dragging the benchmarks lower. The sector slipped for the second consecutive session, after having rallied over the previous four sessions.
The decline followed an announcement by the US administration regarding changes to the H-1B work visa system. Under the new framework, visas will no longer be allocated purely through a lottery. Instead, applications will be weighted to prioritise higher-paid and more skilled foreign workers, according to the US Department of Homeland Security.
This development sparked concerns about potential cost pressures and hiring flexibility for Indian IT companies, which have a significant presence in the US market.
Although brokerages have largely maintained that the long-term impact on Indian IT firms will be manageable, the near-term sentiment took a hit. Investors chose to book profits after the recent rally, leading to mild but broad-based selling across IT counters.
Technical view suggests consolidation, not trend reversal
From a technical perspective, analysts believe the market’s structure remains intact, even as indices cool off from recent highs. The Nifty continues to find support around key levels, suggesting that the current move is more of a consolidation than a reversal.
Anand James, Chief Market Strategist at Geojit Investments Ltd, highlighted the importance of the 26,100 zone for the Nifty.
“The 26,100 region pencilled in as the downside marker remained intact yesterday, providing a launch pad for yet another swing higher. Towards this end, 26,300–26,100 will be the starting range for the day with expectations of large moves on break of either extremity,” James said.
He added that the formation of a doji pattern on the daily chart indicates indecision and a sideways bias in the near term, rather than a breakdown in trend.
What investors should watch next
Market experts said investors should brace for continued volatility in the near term, as multiple cross-currents influence sentiment. Key factors to track include:
-
Direction of FII flows over the next few sessions
-
Global cues, especially US economic data and policy signals
-
Sector-specific developments, particularly in IT and pharma
-
Technical levels around 26,100 support and 26,300 resistance on the Nifty
“The broader trend still appears constructive, but markets need fresh triggers to move decisively higher,” said a technical analyst at a leading brokerage. “Until then, consolidation with intermittent profit-booking is likely.”
Cautious optimism amid consolidation
Despite the intraday decline, market participants emphasised that the overall tone remains stable. The recent pullback reflects a healthy pause after gains, rather than a sign of deeper weakness. As long as key support levels hold and domestic demand indicators remain supportive, the broader outlook for Indian equities remains cautiously optimistic.
For investors, analysts recommend staying selective, focusing on fundamentally strong stocks and avoiding aggressive positions until clearer signals emerge. As one strategist summed it up, “This is a market that rewards patience and discipline, not haste.”
