Markets reel as Sensex tumbles, Nifty slips below key mark
The dominant trigger for the downturn was the sharp rise in crude oil prices amid escalating geopolitical tensions in West Asia, particularly involving the United States and Iran. Higher oil prices have revived concerns about imported inflation, pressure on India's current account, and a potential squeeze on corporate margins. These macroeconomic risks prompted investors to reduce exposure to equities, especially in sectors sensitive to input costs.
Friday's sharp sell-off wiped out roughly Rs 3-4 lakh crore in investor wealth, reflecting the breadth and intensity of the decline across sectors. For the week as a whole, cumulative market capitalisation erosion is estimated at over Rs 8-10 lakh crore, underscoring the sustained pressure on equities.
"The primary drag on today's market came from the IT sector, where earnings disappointment and weak forward guidance triggered a broad-based sell-off," says Hariprasad K, a SEBI-registered Research Analyst and Founder, Livelong Wealth.
The Nifty IT index today declined nearly 5 percent, emerging as the worst-performing sector. Heavyweights like Infosys and HCLTech saw sharp declines after projecting subdued FY27 growth, reflecting continued weakness in global tech spending and cautious client behaviour.
"Beyond near-term earnings, structural concerns are beginning to weigh on sentiment. Management commentary around AI-led efficiencies suggests a deflationary impact on traditional IT services, where automation is compressing deal sizes and pricing power. This introduces a medium-term margin risk, which the market is now actively repricing," Harprasad added.
Weakness in the information technology sector added to the downward momentum. IT stocks came under significant pressure following a subdued growth outlook from a major industry player, which heightened concerns about slowing global demand and cautious client spending. Given the sector's substantial weight in the indices, this decline had a disproportionate impact on overall market performance.
Foreign institutional investor activity remained a drag, with continued outflows reflecting a risk-off approach amid global uncertainty. The pressure on the Indian rupee, which hovered near record lows against the US dollar, further dampened sentiment as it signalled external vulnerability and raised the cost of imports. Together, these factors contributed to a tightening liquidity environment and heightened volatility.
"Escalating tensions in West Asia, particularly around the Strait of Hormuz, have heightened fears of supply disruption, pushing Brent crude above $106 per barrel. For an oil-import-dependent economy like India, this translates into elevated inflation risks, currency pressure, and margin compression across sectors," says Hariprasad.
On Friday, selling was visible across sectors, including banking, automobiles and fast-moving consumer goods, indicating a lack of defensive pockets in the market. Although the broader market segments showed marginally better resilience compared to the benchmarks, they too ended in negative territory, underscoring the pervasive nature of the decline.
For the week, both the Sensex and the Nifty registered losses, reversing the modest gains seen earlier and signalling a shift towards caution among investors. Market participants appeared increasingly wary of elevated valuations in the face of rising macroeconomic risks, particularly those linked to oil prices and global growth uncertainties.
Looking ahead, the near-term trajectory of the market is likely to remain fragile, according to market analyst reports.
"Much will depend on the movement of crude oil prices, the evolution of geopolitical tensions, incoming corporate earnings, and the direction of foreign capital flows. The Nifty's ability to hold the 24,000 level will be closely watched, as a sustained breach could trigger further downside, while any recovery would require a stabilisation in global cues and renewed buying interest," said a stock analyst from a foreign brokerage.
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