Mumbai: Indian benchmark equity indices opened on a weak note on Tuesday, weighed down by persistent foreign institutional investor (FII) selling, geopolitical tensions and rising inflation concerns. However, gains in information technology (IT) stocks provided some support to the markets, limiting the overall downside.
The BSE Sensex declined 302.16 points, or 0.41 per cent, to 73,965.18 in early trade. Similarly, the NSE Nifty50 fell 107.05 points, or 0.46 per cent, to 23,275.55 as of 9:25 am, slipping below the psychologically important 23,300 mark.
Global uncertainties weigh on sentiment
Investor sentiment remained fragile amid prolonged geopolitical tensions in West Asia, particularly the ongoing conflict involving major global powers. Concerns over stalled diplomatic negotiations between the United States and Iran have added to uncertainty in global markets.
Brent crude oil prices hovered near $94 per barrel, intensifying fears of higher input costs and inflationary pressures. Rising crude prices are particularly concerning for India, which is heavily dependent on oil imports. Elevated energy costs could negatively impact economic growth and corporate earnings in the coming quarters.
Further dampening sentiment, FIIs continued their selling spree in Indian equities. On Monday alone, overseas investors sold shares worth ₹3,911.68 crore. Cumulatively, FIIs have withdrawn approximately $26.4 billion from Indian markets so far in 2026, surpassing the previous annual record outflow seen in 2025.
The Indian rupee also weakened, opening 0.1 per cent lower at 95.06 against the US dollar compared to its previous close of 94.99, reflecting sustained pressure from capital outflows and a strong dollar.
Broader markets remain under pressure
The weakness was not limited to frontline indices, as broader markets also traded in the red. The Nifty Midcap 100 index declined 0.51 per cent, while the Nifty Smallcap 100 index slipped 0.33 per cent in early trade.
Despite the broader decline, volatility indicators showed some easing. India VIX, often referred to as the fear gauge of the market, dropped 2.28 per cent, indicating a marginal reduction in near-term volatility expectations.
Sectorally, most indices traded lower, reflecting widespread selling pressure across segments. Financials, healthcare, pharma and private banking stocks witnessed notable declines during the session.
IT stocks provide relief
Amid the overall market weakness, the IT sector emerged as the sole bright spot. The Nifty IT index rose 2.16 per cent, driven by strong buying interest in frontline technology stocks.
Infosys led the gains among Sensex constituents, rising 3.38 per cent. Tata Consultancy Services followed with a gain of 2.75 per cent, while HCL Technologies advanced 1.60 per cent. Tech Mahindra also posted gains of 1.37 per cent.
Market participants attributed the rally in IT stocks to expectations of sustained demand for digital services globally and resilience in the sector despite macroeconomic uncertainties.
Other gainers included Mahindra & Mahindra, Asian Paints and Larsen & Toubro, which traded modestly higher in early deals.
Financial stocks drag indices
On the downside, financial stocks exerted significant pressure on the indices. Bajaj Finance was among the top losers, falling 2.82 per cent, followed by Bajaj Finserv, which declined 1.48 per cent.
NTPC slipped 1.44 per cent, while other major laggards included UltraTech Cement, Sun Pharmaceutical Industries and Bharat Electronics. The decline in financial stocks reflects concerns over interest rates, liquidity conditions and broader economic uncertainty.
Expert view: cautious approach advised
Market experts believe that multiple headwinds are currently impacting Indian equities. These include sustained FII outflows, rising crude oil prices, global economic uncertainty and domestic macroeconomic challenges.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, the global market landscape continues to favour developed markets, with strong performances seen in the United States and select Asian economies. In contrast, India has underperformed due to persistent foreign selling and external pressures.
He also highlighted that the recent energy shock has led to a downward revision in India’s GDP growth forecasts and an upward revision in inflation projections for the current financial year. Additionally, concerns over the India Meteorological Department’s forecast of monsoon rainfall at 90 per cent of the long-term average could have implications for agricultural output and rural demand.
Outlook remains uncertain
Looking ahead, analysts suggest that a resolution of geopolitical tensions in West Asia and a decline in crude oil prices could provide much-needed relief to the markets. However, in the absence of such developments, volatility is expected to persist in the near term.
Investors are advised to adopt a disciplined approach, focusing on asset allocation aligned with their risk profile and long-term financial goals. Staying patient and avoiding knee-jerk reactions to short-term market movements remains crucial in the current uncertain environment.
In conclusion, while the Indian stock market continues to face multiple global and domestic challenges, selective sectoral resilience, particularly in IT, offers some optimism. The trajectory of crude oil prices, foreign fund flows and geopolitical developments will play a key role in shaping market direction in the coming weeks.
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