Sensex Pulls Back 200 Points and Nifty Slips Below 26,050: What Triggered the Market Decline

Sensex Slides from Day’s High as Nifty Ends Below 26,050: Five Key Reasons Behind the Market’s Volatile Session

Markets End Higher but Lose Momentum as Volatility Drags Indices Off Intraday Highs

Indian equity markets managed to close higher on Thursday, snapping a four-day losing streak, but the recovery lost steam midway as intense volatility pulled benchmark indices off their intraday peaks. The Sensex dropped nearly 200 points from its day’s high, while the Nifty slipped below the 26,050 mark before recovering marginally towards the close.

Despite the late-session pullback, the broader tone remained cautious as investors positioned themselves ahead of the RBI’s monetary policy announcement, scheduled for Friday. IT stocks delivered strong support, helping the market stay afloat, even as financials, metals and aviation names weighed on sentiment.

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IT Stocks Lead the Market Rebound as Weak Rupee and Fed Expectations Boost Sector Appetite

After a four-session slide, benchmark indices staged a rebound driven primarily by IT heavyweights. Companies such as TCS, Infosys, Tech Mahindra and HCL Tech gained traction, supported by optimism around a potential U.S. Federal Reserve rate cut and a weaker rupee, which typically enhances dollar-denominated earnings for the tech sector.

Renewed buying interest in IT names helped offset weakness in financials, where stocks like HDFC Bank and ICICI Bank continued to struggle. Broader markets, however, remained subdued with limited participation, and IndiGo’s parent company declined again, extending losses amid ongoing disruptions from flight cancellations.

Market breadth highlighted the underlying weakness: out of 4,302 traded stocks, only 1,817 advanced, while 2,303 declined and 182 remained unchanged. Additionally, 80 stocks hit 52-week highs, while 261 touched new lows, reflecting the contrast between selective sector strength and broad market fatigue.

Benchmarks Witness Intraday Swings as Profit-Booking Caps Gains

Both indices opened weak, with the Sensex falling 156.83 points to 84,949.98 and the Nifty slipping 47 points to 25,938.95. Markets later recovered strongly, with the Sensex jumping 369.80 points to 85,476.62 and the Nifty climbing to 26,096.25, up 110.25 points.

However, sustained profit-booking and global headwinds saw the indices relinquish most of those gains. The Sensex eventually settled 158.51 points (0.19%) higher at 85,265.32, while the Nifty ended just below previous levels at 26,033.75, down 47.75 points or 0.18%.

IT stocks continued to dominate the leaderboard, while aviation and financials dragged.

Top Gainers and Losers: IT Leads, Airlines and Financials Lag

Top Gainers (Nifty50)

• Tech Mahindra: +1.51%

• HDFC Life: +1.49%

• TCS: +1.48%

• SBI Life: +1.41%

• BEL: +1.25%

Top Losers (Nifty50)

• IndiGo (InterGlobe Aviation): –2.39%

• Reliance Industries: –0.88%

• Hindalco: –0.65%

• Maruti Suzuki: –0.64%

• Titan: –0.62%

InterGlobe Aviation, Dr. Reddy’s Laboratories and Kotak Mahindra Bank were among the major laggards, slipping up to 2 percent. Meanwhile, TCS and Tech Mahindra outperformed, rising up to 2 percent amid renewed confidence in IT earnings resilience.

Sector Performance Shows Divergence as IT and Realty Gain, Media Slips

Sectoral trends painted a picture of clear divergence in Thursday’s trade, with IT and realty stocks emerging as the day’s bright spots even as other pockets of the market struggled to find firm footing. Technology names benefited from a softer rupee and renewed optimism around global rate cuts, while realty counters held steady on expectations of sustained demand momentum. In contrast, media stocks continued to tumble, weighed down by inconsistent advertising flows and broader risk aversion. This split underscored how investors selectively rotated into defensives and growth-oriented themes, leaving sentiment uneven across the market landscape.

Top Gaining Sectors

• IT: +1.41%

• Realty: +0.54%

• FMCG: +0.47%

• Auto: +0.32%

Top Losing Sectors

• Media: –1.45%

• Consumer Durables: –0.62%

• Oil & Gas: –0.05%

IT’s leadership reflected global tech strength and favourable currency dynamics, while media stocks remained under pressure due to industry-specific concerns and volatile advertiser spending trends.

Five Key Reasons Behind Today’s Market Decline

1. Rupee Weakness Pressures Sentiment

The Indian rupee fell 28 paise to a fresh low of 90.43 against the US dollar during early trade. A weakening currency tends to erode foreign investor confidence, as it reduces portfolio returns and raises import-related risks for corporates.

Even though the rupee later improved to 89.98 per dollar, early volatility dented market sentiment.

2. Sustained FII Selling Continues to Drag Equities

Foreign Institutional Investors (FIIs) sold ₹3,206.92 crore worth of equities on Wednesday, marking the fifth straight session of outflows. Persistent selling by offshore investors has been a major headwind for Indian markets, overshadowing strong domestic participation.

Analysts attribute the selling to:

• Global risk aversion

• Rising US Treasury yields

• Weakness in Asian currencies

• Concerns over domestic valuations

3. RBI Policy Caution Keeps Investors on the Sidelines

With the RBI Monetary Policy Committee set to announce its decision on Friday, traders avoided aggressive positioning. Strong growth and a weakening rupee have complicated the rate-cut narrative, creating uncertainty around the central bank’s tone.

“Investors are focused on the RBI’s policy call and tone,” said Kranthi Bathini, Director of Equity Strategy at Wealthmills Securities.

Prashanth Tapse of Mehta Equities added that the sliding rupee, geopolitical risks and global policy cues could introduce fresh volatility, keeping markets range-bound.

4. Weekly Derivatives Expiry Intensifies Volatility

The Thursday expiry of weekly index derivatives triggered sharp swings as traders squared off and rolled over positions. As a result, benchmarks oscillated between gains and losses, with sudden intraday reversals across banking, auto and midcap counters.

5. Firm Crude Oil Prices Add to Macro Uncertainty

Brent crude edged up 0.35% to $62.89 a barrel, amplifying concerns around India’s import bill and inflation expectations. Rising crude prices typically deepen currency stress and hurt sectors sensitive to input cost inflation.

Market Technical View: Consolidation Likely Before Next Move

According to Anand James, Chief Market Strategist at Geojit Financial Services, the Nifty appears to be entering a consolidation phase.

He said the index needs to sustain above 26,111 or break 26,200 to resume its uptrend. A fall below 25,935, however, could signal renewed downside pressure.

This aligns with the day’s choppy price action, where the Nifty’s attempt to reclaim 26,100 stalled repeatedly.

Rupee Undervaluation May Eventually Attract FII Buying, Say Brokerages

Interestingly, some brokerages suggest that the rupee’s underperformance could eventually draw foreign investors back to Indian markets. A significantly undervalued currency makes Indian equities more attractive on a relative basis.

The rupee opened at 90.41 and strengthened to 90.11 midday. However, analysts expect it to remain under pressure in the 89.50–91.20 range, depending on crude prices and global risk appetite.

Rahul Gupta of Ashika Group noted that meaningful recovery will depend on:

• Revival in foreign inflows

• Clarity on global rate cuts

• Improvement in India’s exports

• RBI’s selective intervention

Market Breadth and India VIX Reflect Underlying Weakness

Despite the headline indices managing to stabilise, the underlying market tone remained fragile, as reflected in the weak market breadth and subdued volatility index. Advancers continued to lag decliners by a wide margin, signalling that buying interest was concentrated in only a handful of sectors while broader participation stayed muted. The India VIX slipping over 3 percent to settle near 10.82 further highlighted a sense of complacency, suggesting that while traders are not pricing in immediate turbulence, the lack of conviction across mid- and small-cap counters points to lingering caution beneath the surface. The advance-decline ratio remained negative, with:

• Advancers: 1381

• Decliners: 1746

• 52-week highs: 25

• 52-week lows: 208

India VIX dropped 3.52% to 10.82, indicating that despite volatility in price action, traders are not expecting extreme near-term turbulence.

F&O Ban List: Key Stocks Under MWPL Restrictions

Securities in Ban

• Sammaan Capital

Possible Entrants

(Kaynes, Bandhan Bank, Adani Enterprises, CONCOR, HFCL, IRCTC, RBL Bank, IDEA, SAIL, LICHSGFIN, Crompton, IEX, Angel One, PNB, HUDCO, Glenmark, NMDC, Inox Wind, DLF, Titagarh, PGEL, AB Capital, NBCC, Biocon, MCX, National Aluminium, RECLTD, RVNL)

No stocks are set to exit the ban list today.

Conclusion: Markets Hold 26,000 but Caution Dominates Ahead of RBI Policy

Thursday’s session reflected the market’s struggle to balance IT-driven strength with macro-induced caution. While benchmarks ended higher, the inability to sustain intraday gains underscores investor hesitation ahead of key policy announcements and global cues.

With the rupee under pressure, FIIs selling persistently, and crude inching higher, markets may remain volatile. However, IT sector resilience and expectations of global rate easing continue to provide essential support.

• Nifty 50
• Bank Nifty
• Sensex

FAQs Sensex Slides from Day’s High as Nifty Ends Below 26,050

Why did the Sensex fall from its intraday high despite IT stocks performing strongly?

The Sensex slipped from its day’s high due to profit-booking, persistent FII selling, volatility from the weekly expiry, and weakness in financials and select heavyweight stocks. While IT stocks supported the indices, broader market fragility ultimately capped the upside.

How does a weakening rupee impact Indian stock markets and foreign investor sentiment?

A weakening rupee reduces the returns foreign investors earn on Indian assets, often prompting them to reduce exposure. It also raises concerns about imported inflation, making investors cautious, especially in sectors dependent on global demand or dollar-denominated costs.

Why are IT companies benefiting when the rupee is under pressure?

Most Indian IT firms earn a large portion of their revenue in US dollars. When the rupee depreciates, dollar income translates into higher rupee earnings, improving margins and profitability. This currency tailwind supports IT stocks even during broader market volatility.

What key factors are influencing Nifty’s inability to sustain above the 26,100 level?

Nifty is struggling to sustain above 26,100 due to cautious positioning ahead of the RBI policy, selling pressure from FIIs, rising crude oil prices, and weak market breadth. Technical resistance zones near 26,111 and 26,200 are also restricting momentum.

How will the RBI’s upcoming monetary policy decision affect near-term market direction?

Markets expect heightened volatility around the RBI announcement. A neutral or hawkish tone could weigh on rate-sensitive sectors like banks and autos, while dovish hints may support broader indices. Investors are watching for commentary on inflation, currency stability, and liquidity management.

Why are media and consumer durable stocks slipping even when IT and realty sectors are gaining?

Media stocks are under pressure due to unstable advertising trends and macro uncertainty, while consumer durable companies face margin concerns from currency weakness and input cost fluctuations. In contrast, IT and realty sectors are benefiting from favourable currency conditions and strong demand visibility.

What does the India VIX falling below 11 indicate for short-term market stability?

A VIX reading below 11 typically signals low expected volatility, suggesting that traders do not foresee sharp near-term market swings. However, when combined with weak market breadth—as seen currently—it can also reflect complacency, making markets vulnerable to sudden reactions to policy or global events.