Tuesday's relief rally proved short-lived. Indian equity markets fell sharply again in early trade on Wednesday, with the BSE Sensex dropping as much as 930 points to a morning low of 73,719.36 against Tuesday's close of 74,649.84. The NSE Nifty 50 touched a morning low of 23,225.50, a fall of 258 points from its previous close of 23,483.55. If the trend continues through the day, it would make this the fifth session of losses in six trading days.
Three factors combined to drag markets lower. First, Brent crude climbed back above $97 per barrel, a persistent headache for India, which imports the bulk of its oil needs. The US Trade Representative proposing 12.5 per cent additional duties on India and 53 other countries, after Trump alleged failure in curbing trade in goods made with forced labour, added to the woes.
Second, IT stocks, which had rallied nearly 7 per cent over the previous two sessions, fell 4.3 per cent as enthusiasm over AI-driven software spending cooled.
Third, all 16 major sectoral indices traded in the red, with broader small-caps and mid-caps falling 0.6 per cent and 0.8 per cent, respectively. In the Sensex, only Maruti Suzuki and Mahindra were consistently green. The middle order was in flux, and the IT stocks made the bottom rung. IndusInd Bank dropped close to 2.4 per cent on reports of a fresh whistleblower complaint alleging insider trading and governance failures.
Foreign institutional investors continued to be net sellers, having offloaded equities worth ₹8,362.92 crore on a net basis on Tuesday. This was the largest single-day FII outflow in recent sessions, taking the 2026 total to a record $26.8 billion.
The rupee fell 28 paise to 95.64 against the dollar in early trade on Wednesday, after talks of additional US tariffs. The Centre denied the allegations and called for the matter to be resolved within ongoing bilateral trade negotiations.
Markets are now watching the RBI Monetary Policy Committee's rate decision on June 5 closely.
