NEW DELHI: India's equity markets, particularly midcap and smallcap stocks, faced intense selling pressure as investors turned cautious amid hawkish signals from the US Federal Reserve and escalating tensions between Iran and Israel. While the benchmark indices—BSE Sensex and NSE Nifty—ended marginally lower for the third consecutive session on Thursday, the midcap and smallcap segments bore the brunt of the selloff, plunging up to 2%.
The Nifty Smallcap 100 tumbled 1.99%, while the Nifty Midcap 100 dropped 1.63%. The sharp decline in the broader market wiped out nearly Rs 4 lakh crore of investor wealth, dragging the total market capitalisation of BSE-listed firms down to Rs 442.5 lakh crore from Rs 446.3 lakh crore in the previous session.
"Broader market sentiment remained risk-averse, as mid- and small-cap segments witnessed pronounced profit-booking. The Nifty Midcap 100 and Nifty Smallcap 100 declined over 1.5% apiece, reflecting a flight to safety as market participants rotated capital into large-cap, defensively positioned blue-chip counters," said analysts at Bajaj Broking.
The brokerage added that the persistent downtrend was underscored by escalating geopolitical tensions in the Middle East, adding to investor caution. As Israel and Iran continue to trade blows, there has been a steady rise in oil prices.
On the global front, the US Federal Reserve, in its latest FOMC policy outcome, kept the federal funds rate steady at 4.25%–4.50%, in line with market expectations. The Fed also reiterated the risks arising from the trade war triggered by President Donald Trump’s tariff policies.
Ajit Mishra – SVP, Research, Religare Broking said that the strength in the benchmark index does not reflect the underlying market tone, as we are witnessing gradual profit booking across sectors and in the broader market.
"With geopolitical tensions driving crude prices higher, further deterioration is likely if crude makes a sustained move above the $80 mark. We reiterate our cautious view and advise closely monitoring positions until we see further clarity," added Mishra.
Sectorally, Nifty PSU Bank, Nifty Metal, and Nifty Media indices correcting sharply on Thursday, each shedding up to 2%. Among Nifty50 stocks, Adani Ports fell 2.52% while Bajaj Finance and Adani Enterprises were among other top laggards.