The sharp rally in Indian equities lost momentum on Friday, with the Sensex and Nifty slipping deep into the red and snapping a five-session winning streak, as heavy selling in IT stocks, weak global cues and other headwinds weighed on investor sentiment.
Sensex tumbled 607 points to close at 76,802.90, while Nifty 50 declined 155 points to end the session at 24,013.10. This came after the benchmark indices had jumped up to 5% over the past five sessions.
Infosys, TCS, HCL Tech and Tech Mahindra were the top laggards on the Sensex, plunging 2–6% each. HDFC Bank and M&M fell around 2% each. Defying the broader weakness, Eternal and Bharti Airtel gained nearly 2% each to emerge as the top gainers. Broader markets, however, outperformed, with the Nifty Midcap 100 and Nifty Smallcap 100 indices gaining up to 0.4%.
This comes as India VIX, which measures volatility in the stock market, inched up slightly to 12.77 on Friday. Sectorally, Nifty IT crashed nearly 4% to lead losses. The market breadth remained positive, with 1,761 stocks advancing on the NSE, while 1,523 declined and 117 remained unchanged.
Notably, today also saw FTSE and Sensex rebalancing. FTSE was expected to see a reasonably active volume day, with India estimated to witness passive FII inflows of over $600 million, driven largely by multiple recent listings making the cut for inclusion, according to Nuvama Institutional Equities. On the Sensex side, the only meaningful change was expected to be a weight increase in Bharti Airtel, it added.
Here are the key factors pushing the stock market down:
1) Heavy selloff in IT stocks
IT heavyweights, including Infosys, TCS, Tech Mahindra and HCL Tech, crashed up to 7%, following an 11% plunge in Accenture’s share price on Wall Street after the consulting major revised its FY26 revenue growth guidance to 3–4%, compared with its earlier outlook of 3–5%. The company also projected fourth-quarter revenue of $17.75–18.4 billion, falling below Street expectations of $18.47 billion, according to LSEG data.
Accenture’s softer outlook may have retriggered worries that enterprises remain cautious on discretionary spending related to IT consulting and digital transformation projects, even as investments in artificial intelligence and cybersecurity continue. Indian IT companies derive a major portion of their revenue from the US economy. Hence, worries around reduced discretionary spending may have led to the sharp selloff in these stocks on Dalal Street.
Read More: TCS, Infosys, Wipro, other IT stocks crash up to 8% as Accenture lowers FY26 guidance
2) FII turn net sellers
After remaining net buyers of Indian equities for three consecutive sessions, foreign investors turned net sellers on Dalal Street on Thursday, net selling shares worth Rs 1,025 crore, according to provisional data on NSE. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, however, highlighted that FII selling has reduced, and aggressive DII buying eclipsing FII selling can impart resilience to the market.
3) Profit booking
Today’s selloff in the market may have also been driven by profit booking. Sensex jumped nearly 5% over the past five sessions, while Nifty 50 gained over 4% as the US-Iran peace deal brought much-needed relief to the stock market, which took heavy losses earlier amid the raging war. However, investors may be booking profits today after the sharp rally amid underlying headwinds.
4) Weak global cues
Dalal Street is mostly accompanied by its Asian peers in losses today. South Korea’s Kospi closed in the red, while Japan’s Nikkei closed with marginal gains. Wall Street indices rallied yesterday, but Dow Jones futures are currently down, implying a bearish start for Wall Street today.
5) US-Iran peace talks called off
US talks with Iranian negotiators on an agreement to end the Middle East conflict would not take place on Friday, as Vice President JD Vance dropped plans to travel to Geneva, adding to the uncertainty whether a lasting truce can be found. "The logistics of these negotiations have never been simple or predictable," a White House spokesperson said in a statement on Thursday night. Vance and the US delegation had been ready to depart as soon as plans were finalised.
Israel meanwhile has distanced itself from the US-Iran accord and kept up fighting against the Iranian-allied Hezbollah militant group in Lebanon, also raising questions about whether the agreement would hold.
US Vice President JD Vance, during an interview, criticized Israel for a "weird panic" and "freakout" over the agreement struck between the US and Iran. This comes as Israeli officials, including some of Prime Minister Benjamin Netanyahu's allies, have criticized the agreement, saying it did not address their concerns over Iran's nuclear and ballistic missile programs and would tie down Israel's military operations against the Iran-backed Hezbollah militia in Lebanon. Far-right Israeli cabinet minister Itamar Ben-Gvir responded to Vance in a post on X, “This is the proposal, @JDVance: To deal with the Nazis of the 21st century, just as the United States dealt with the Nazis of the 20th century.”
What lies ahead?
The equity market witnessed profit booking following the recent relief rally, as investor sentiment was dampened by the unexpected cancellation of peace talks between the US and Iran, said Vinod Nair, Head of Research at Geojit Investments. He noted that the IT index experienced a sharp correction, driven by Accenture’s softer outlook, which has heightened concerns over discretionary and digital spending.
“In the near term, investors are likely to adopt a cautious tone, with participants awaiting greater clarity on the peace deal and monitoring the slow progress of the southwest monsoon. Nevertheless, a buy-on-dips strategy appears prudent, supported by the current comfort in oil prices and expectations of an earnings revival in H2FY27,” he added.
Technical view on Nifty
The Nifty snapped its five-session winning streak and formed a small-bodied bullish candle on the daily chart, Nilesh Jain, VP and Head of Technical and Derivative Research at Centrum Finverse, highlighted. Despite the intraday weakness, the index witnessed a strong recovery from lower levels and managed to close above the 24,000 mark on a weekly basis, he added.
“The broader trend remains positive as the index continues to trade above its short-term 50-DMA, placed at 23,840, keeping the possibility of a gradual move towards 24,400 intact in the near term. Momentum indicators also remain supportive, with the MACD sustaining a buy crossover and the RSI holding above the 60 mark, indicating a bullish undertone. Meanwhile, India VIX declined 13% during the week to settle below 13, and any further moderation in volatility could provide additional support to the market’s positive sentiment,” the analyst said.
“Overall, the technical outlook remains bullish, with support placed at 23,900 and positional support at 23,800, while resistance is seen in the 24,200–24,250 zone. A buy-on-dips strategy should be adopted,” said Vatsal Bhuva, Technical Analyst at LKP Securities.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
