A steep selloff in information technology stocks and a spike in crude oil prices ended the benchmark equity indices’ three-day rally on Wednesday, as escalating tensions in West Asia weighed on investor sentiment.
The Sensex fell 757 points, or 0.95 per cent, to close at 78,516, while the Nifty 50 declined 199 points, or 0.81 per cent, to 24,378. In the previous session, both indices had closed at their highest levels since March 3, then buoyed by optimism over a potential extension of the US-Iran ceasefire. On Wednesday, however, Iran seized two ships in the Strait of Hormuz, tightening its grip on the strategic waterway, even as US President Donald Trump called off attacks indefinitely despite no signs of peace talks restarting.
Technology shares led the decline, with the Nifty IT index sliding nearly 4 per cent. HCLTech plunged about 11 per cent, its steepest fall in more than a decade, after issuing weaker-than-expected annual guidance. The cautious outlook dragged down sector peers including Infosys and TCS.
Market participants pointed to a mix of geopolitical uncertainty and disappointing earnings guidance as key drivers of the correction. “Higher oil prices, continued geopolitical tensions between the US and Iran, and persistent foreign fund outflows have kept volatility elevated,” said Vikram Kasat, head of advisory at PL Capital.
Crude oil prices briefly surged to near $100 a barrel on concerns over potential supply disruptions. “With Brent crude stubbornly hovering near $100 a barrel. For an import-dependent economy, such as India, these prices act as a ‘direct tax’ — weakening the rupee and fuelling inflationary fears. Any fresh ‘war headlines’ will likely trigger immediate and high-magnitude volatility,” said Mayank Jain, market analyst at Share.Market.
Analysts said oil price trends and developments in the US-Iran conflict would remain the key near-term catalysts for equities. Siddhartha Khemka, vice-president and head of retail research at Motilal Oswal Financial Services, said the decline was amplified by profit-taking following the recent rally. He added that the IT sector continues to face headwinds from cautious discretionary spending, delayed deal closures amid uncertainty in the US, and pricing pressure linked to the growing adoption of artificial intelligence.
Market volatility remained elevated, with the India Vix rising more than 4 per cent.
Both foreign portfolio investors and domestic institutional investors turned net sellers on Wednesday after a 12 per cent rebound in equities this month. Foreign investors sold shares worth ₹2,078 crore, while domestic institutions offloaded equities worth ₹1,048 crore.
Despite weakness in the headline indices, broader markets remained resilient. The Nifty Midcap 100 index edged up 0.2 per cent, while the Smallcap 100 gained 1.1 per cent.
Index heavyweights HDFC Bank and ICICI Bank fell 1.5 per cent each, weighing on benchmarks. Gains in Reliance Industries and Hindustan Unilever helped limit losses. HUL rose nearly 3 per cent after Nestlé reported strong March-quarter results.