Markets log steepest decline since Budget day as heavyweights drag

Heavy weights HDFC Bank, RIL, ICICI Bank drag down benchmark indices by over a per cent

Indian equities declined on Friday, with benchmark indices logging their steepest fall since Budget day, as losses in heavyweight stocks and diminishing expectations of an imminent US Federal Reserve rate cut triggered a broad selloff. The continued selloff in information technology (IT) stocks also weighed on sentiment.

 

The Sensex ended the session at 82,627, down 1,048 points, or 1.3 per cent, while the Nifty closed at 25,471, a fall of 336 points, or 1.3 per cent. For both indices, this marked the sharpest single-day decline since February 1. The total market capitalisation of BSE-listed companies fell by ₹7 trillion to ₹465 trillion. So far this year, market capitalisation has declined by ₹10 trillion. 

 

On a weekly basis, the Sensex slipped 1.1 per cent and the Nifty 0.9 per cent, erasing part of the gains recorded last week following optimism over an India-US trade deal.

 

HDFC Bank, which fell 1.6 per cent, emerged as the biggest drag on the indices, followed by Reliance Industries, down 2.1 per cent, and ICICI Bank, which declined 1.1 per cent. Hindustan Unilever was the worst-performing Sensex stock, plunging 4.4 per cent after reporting weak volume growth for the December quarter.

 

The decline comes despite a revival in foreign portfolio investor (FPI) inflows that had supported markets earlier this month. FPIs, after being net sellers to the tune of ₹1.7 trillion in 2025 and ₹35,962 crore in January, turned net sellers again in February, lapping up shares worth ₹19,675 crore. However, FPIs pulled out nearly ₹7,400 crore from domestic stocks on Friday, the highest net selling since August 29, 2025. Domestic institutional investors cushioned the blow as they injected ₹ 5,554 crore.

 

Strong US jobs data earlier this week prompted investors to scale back expectations of Fed rate cuts, clouding the outlook for foreign inflows.

 

Technology stocks bore the brunt of selling amid concerns that artificial intelligence-led disruption could undermine the business models of IT services companies. The Nifty IT index fell as much as 5.2 per cent intraday before closing 1.4 per cent lower. For the week, the index declined 8.2 per cent, marking its steepest weekly fall since April 4, 2025.

 

“Sentiment gains from the US-India trade deal have faded as renewed AI-driven disruption fears weigh on risk appetite. Markets are increasingly concerned that Indian IT firms reliant on the labour arbitrage model may face sharper competitive pressure than their Nasdaq peers,” said Vinod Nair, head of research at Geojit Financial Services. “This cautious tone spilled over into the broader market, pulling all major indices into negative territory, with most sectors ending in the red.”

 

Looking ahead, investors will closely track further details of the India-US trade agreement for direction.

 

“As long as there is no adverse global news, Indian markets should perform reasonably well. Most headwinds — whether related to the trade deal or December quarter earnings — are largely priced in. We have also seen a revival in FPI investments, and the rupee has stabilised,” said Ambareesh Baliga, an independent equity analyst.

 

Market breadth remained weak, with 2,960 stocks declining against 1,253 advances on the BSE. All Nifty sectoral indices ended with losses, while the India Volatility Index (Vix)  rose 13 per cent. The broader market Nifty Midcap 100 and the Nifty Smallcap 100 indices fell over 1.7 per cent each.  Back in the red