The domestic equity markets witnessed a sharp sell-off on Friday as the Sensex plunged over 1,000 points by the close, triggering a significant erosion of investor wealth with more than Rs 6.50 lakh crore wiped off market capitalisation. Heavy selling in index heavyweights, particularly in information technology and select banking stocks, dragged the benchmarks decisively lower through the session.
The decline reflected a clear risk-off mood among investors amid weak global cues, concerns over interest rate trajectories and persistent uncertainty around earnings visibility. Broad-based selling pressure, especially in large-cap stocks, compounded the fall, underscoring fragile sentiment and a cautious approach among market participants as they await clearer domestic and global triggers.
After opening on a tentative footing, benchmark indices struggled to find sustained buying support through the day, with selling pressure intensifying in the afternoon session and pulling the markets significantly lower by the close.
"The domestic markets extended losses for the second consecutive session on Thursday, closing decisively lower amid a deepening selloff led by the IT sector. The Nifty 50 ended at 25,471.10, down 336.10 points or 1.30%, while the Sensex plunged over 1,000 points, eroding substantial market capitalisation in a broad-based risk-off move," said R Ponmudi, a senior market analyst and CEO of online trading and wealth tech firm Enrich Money.
He added that the sharp decline was largely driven by intensifying global concerns over AI-led disruption to India’s outsourcing model, which triggered heavy selling in IT heavyweights. The spillover, coupled with cautious Asian cues, further reinforced the negative undertone.
The Sensex and the Nifty largely moved within a narrow range in early trade as participants weighed positive domestic fundamentals against a softer global risk environment. However, as the session progressed, heavyweight stocks, particularly in information technology and select financials, came under pressure, dragging the benchmarks off intraday highs.
Information technology stocks were among the key drags on the market. Continued concerns over demand visibility in key overseas markets, coupled with nervousness ahead of global inflation data and interest rate signals from the United States, weighed on sentiment across the sector. Investors remained wary about near-term margin pressures and cautious guidance, leading to steady selling in large-cap IT names. This weakness offset relative stability seen in some domestically oriented sectors.
Banking and financial stocks showed mixed trends. While select private lenders and non-banking financial companies saw mild buying on expectations of stable asset quality and credit growth, others witnessed profit-booking after recent gains. The broader financial space failed to provide decisive support to the benchmarks, reflecting selective participation rather than a broad-based rally.
Market breadth remained weak, with declining stocks outnumbering advances, especially in the mid-cap and small-cap segments. Broader indices underperformed the benchmarks as investors continued to trim exposure to higher-risk stocks, preferring to stay positioned in relatively safer large-cap names. This divergence highlighted ongoing caution among market participants despite the absence of any sharp domestic negative trigger.
From a macro perspective, traders remained focused on global developments, including movements in US bond yields, crude oil prices and currency markets. The rupee’s muted movement offered limited comfort, while uncertainty over the timing and pace of global monetary easing kept risk appetite in check. At the same time, investors continued to track domestic cues such as government spending trends, corporate earnings commentary and valuation comfort after recent market volatility.
"Additional pressure stemmed from a firm US dollar and mild rupee depreciation, prompting defensive positioning and selective profit booking across banking, financials, autos, FMCG, metals, and energy counters. Although January retail inflation eased to 2.8% under the revised CPI base — a constructive domestic macro signal — the positive data print proved insufficient to offset prevailing global uncertainties. Overall, the near-term fundamental tone remains cautious, with heightened risk aversion, defensive rotation, and consolidation dominating market dynamics," Ponmudi said.