Indian equities declined sharply on Friday, with benchmark indices recording their steepest fall since Budget day as losses in heavyweight stocks and fading hopes of an imminent US Federal Reserve rate cut triggered a broad-based selloff. Continued weakness in information technology stocks further dampened market sentiment.
The Sensex closed at 82,627, down 1,048 points or 1.3%, while the Nifty settled at 25,471, falling 336 points or 1.3%. For both indices, this marked the sharpest single-day decline since February 1. The total market capitalisation of BSE-listed firms dropped by ₹7 trillion to ₹465 trillion, taking the decline so far this year to ₹10 trillion.
On a weekly basis, the Sensex slipped 1.1% and the Nifty 0.9%, erasing part of last week’s gains that had followed optimism over an India-US trade deal.
Among major stocks, HDFC Bank fell 1.6% and emerged as the biggest drag on the indices, followed by Reliance Industries, down 2.1%, and ICICI Bank, which declined 1.1%. Hindustan Unilever was the worst-performing Sensex stock, plunging 4.4% after reporting weak volume growth for the December quarter.
The fall came despite a brief revival in foreign portfolio investor (FPI) inflows earlier this month. After being net sellers worth ₹1.7 trillion in 2025 and ₹35,962 crore in January, FPIs turned net sellers again in February, buying shares worth ₹19,675 crore but pulling out nearly ₹7,400 crore from domestic equities on Friday alone — the highest net selling since August 29, 2025. Domestic institutional investors helped cushion the impact with inflows of ₹5,554 crore.
Strong US jobs data released earlier in the week prompted investors to scale back expectations of early Federal Reserve rate cuts, clouding the outlook for foreign inflows.
Technology stocks bore the brunt of the selling amid concerns that artificial intelligence-led disruption could affect the business models of IT services companies. The Nifty IT index fell as much as 5.2% intraday before closing 1.4% lower. For the week, the index dropped 8.2%, its steepest weekly decline since April 4, 2025.
Vinod Nair, head of research at Geojit Financial Services, said optimism from the India-US trade deal had faded as concerns over AI-driven disruption hurt risk appetite. He noted that markets fear Indian IT firms dependent on the labour-arbitrage model could face sharper competitive pressure than global peers, a sentiment that spilled over into the broader market and dragged all major indices lower.
Market breadth remained weak, with 2,960 stocks declining against 1,253 advances on the BSE. All Nifty sectoral indices ended in the red, while the India Volatility Index (VIX) rose 13%. The broader market also saw losses, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling more than 1.7% each.
Investors will now watch for further clarity on the India-US trade agreement for market direction. Independent equity analyst Ambareesh Baliga said that in the absence of adverse global developments, Indian markets could remain reasonably stable, as most headwinds — including those related to the trade deal and December quarter earnings — are largely priced in. He added that FPI inflows have shown signs of revival and the rupee has stabilised, which could support markets going forward.