Indian stock markets extended their losing streak for the third consecutive session on Wednesday, as persistent selling in major stocks, escalating geopolitical tensions, and negative global trends combined to erode investor sentiment.
Benchmarks Slide Amid Sustained Selling
The BSE Sensex has now dropped over 1,144 points in the last three trading days. It slid from a closing level of 85,762.01 on January 2 to an intraday low of 84,617.49 during Wednesday's session. Similarly, the NSE Nifty 50 declined by nearly 1 percent over the same period, firmly pushing the key indices into negative territory for the week.
By the end of trading, the Sensex managed to recover some ground but still closed 102 points, or 0.12 percent, lower at 84,961.14. The Nifty settled at 26,140.75, down 38 points or 0.14 percent.
Heavyweight Stocks Exert Major Pressure
The decline was primarily driven by sustained selling pressure in index heavyweight stocks. On Wednesday, shares of HDFC Bank fell 1.7 percent, while Reliance Industries declined 0.4 percent. Trent stock dropped another 1.4 percent, adding to an 8.6 percent plunge in the previous session, fueled by worries about increasing competition in the retail sector.
This drag from large-cap stocks was also evident earlier in the week. HDFC Bank and Reliance Industries, the two most influential stocks on the indices, had fallen 1.5 percent and 4.3 percent respectively, magnifying the losses for the benchmarks.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments, observed that recent market movements lack a clear direction, with a handful of mega-cap stocks disproportionately swaying the overall trend. He explained that the sharp drops in stocks like Reliance and HDFC Bank were likely more technical in nature, related to derivative settlement activity, rather than reflecting any fundamental weakness in the companies.
Global Geopolitical Jitters Add to Woes
Investor risk appetite was further dampened by geopolitical turmoil, notably the political crisis in Venezuela. Market sentiment turned cautious following a controversial US military operation on January 3 that led to the capture of Venezuelan President Nicolás Maduro and his wife. The developments have heightened broader anxieties about global policy and stability.
Vijayakumar warned of potential high volatility ahead, driven by events and news flow. He specifically pointed to the influence of actions by former US President Donald Trump and an impending Supreme Court verdict on Trump-era tariffs as critical events for investors to monitor.
Weakness in global markets also spilled over. Indian equities mirrored declines across Asia, where shares retreated as investors assessed the fallout from the Venezuela situation and uncertainty over global energy supplies. Sentiment in the region was also weighed down by tensions between China and Japan following remarks by Japanese Prime Minister Sanae Takaichi on Taiwan.
Technical View: Consolidation Phase with Volatility Risk
Technical analysts suggest the current decline represents a broader corrective or consolidation phase rather than a breakdown of the longer-term bullish trend. However, they caution that near-term volatility remains high.
Jaykrishna Gandhi of Emkay Global noted that since 1991, the Nifty has witnessed seven major bullish cycles, typically followed by corrective phases. He highlighted that post-2009, corrections have often taken the form of time-wise consolidations rather than sharp price falls, indicating improved market structure. Gandhi believes the index has recently completed a time correction and sees potential for the resumption of an uptrend, with an upside target of 28,500 and support in the 25,300-25,500 band.
On sectors, he highlighted strength in pharmaceuticals, noting that the Nifty Pharma index has broken out of a bullish 'inverted head and shoulders' pattern.
Anand James, Chief Market Strategist at Geojit Investments, added that while some oscillators suggest continued upside momentum, the India VIX index being near record levels indicates a high potential for a rise in volatility, warning of possible sharp swings in the sessions ahead.
