Indian equities came under heavy pressure on Thursday, ending a three‑session winning run as a mix of surging crude prices, Fed's mixed signals, and profit‑taking in major banking and FMCG stocks dragged the benchmarks lower. The BSE Sensex slumped 870 points, hitting an intraday low of 82,864, after falling as much as 1,106 points from its high earlier in the day. The Nifty 50 also retreated sharply, dropping 252 points to touch 25,568, after having climbed to 25,885 in morning trade.
Around 1 PM, the Nifty MidCap index slipped 0.81%, while the Nifty SmallCap eased 0.52%, signalling a broadly cautious tone across the wider market. Meanwhile, India VIX, the NSE's volatility indicator, rose 8.47%, reflecting a spike in market nervousness.
Here are three key reasons why markets are falling today:
Profit Booking
This drawdown comes after three consecutive trading sessions of gains. Harshal Dasani, Business Head, INVAsset PMS says that the decline appears to be a classic case of tactical profit-booking rather than a structural shift in trend. "The sharp intraday drawdown reflects active unwinding of leveraged and short-term positions rather than fresh risk aversion from long-term investors," he says. He added that, "the decline has been broad but orderly, with pockets of resilience in selective defensives and technology names, indicating sectoral rotation rather than capitulation."
Fed's Surprise Mixed Signals
The minutes from the US Federal Reserve's January meeting revealed a split within the committee about the path forward. While some policymakers indicated they would be open to easing if inflation continues to drift lower, others signaled they are prepared to tighten monetary policy again should price pressures remain stubborn.
For Indian markets, this uncertainty carries meaningful implications. Any extended delay in rate cuts — or the possibility of an unexpected Fed hike — could bolster the US dollar. A stronger dollar often weighs on foreign portfolio flows into emerging markets like India. This comes at a delicate time, as FII inflows have only just resumed in February after seven straight months of outflows in the cash segment, making the stability of global liquidity especially important.
Rising Crude Prices
Oil prices stayed firm on Thursday, extending the previous session's strong gains as traders weighed the risk of supply disruptions amid heightened U.S.–Iran tensions. Brent crude was trading around $70.31 a barrel, easing slightly after Wednesday's 4.35% surge, while WTI held most of its 4.6% jump, hovering near $65.10 in early deals. By midday, Brent remained above the $70 mark, up 0.26%, and WTI added 0.32% to trade close to $65.4.
Dasani added that, "firm crude prices and synchronized selling across key sectors—including financials, metals, autos, and consumption—added pressure to sentiment." Market participants continued to monitor developments in the Middle East after Iran announced plans to launch rockets across parts of its southern region on Thursday between 9:00 AM to 7:00 PM IST.
At the same time, the U.S. has moved warships closer to Iran, with Vice President JD Vance indicating that Washington is weighing whether to pursue further diplomatic engagement with Tehran or consider “another option,” adding to the sense of geopolitical uncertainty supporting crude prices.
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