After posting gains for three consecutive sessions, markets witnessed profit booking across sectors. By early afternoon, the Sensex was down over 760 points, trading near 82,970 levels, while the Nifty declined more than 225 points to hover around 25,594.
Market breadth remained weak, with declining stocks significantly outnumbering advancing ones. Broader indices also came under pressure, as mid-cap and small-cap stocks slipped nearly one percent each.
The previous three sessions had seen the benchmarks gain around 1.4 percent, supported by largely stable December-quarter earnings.
Four Key Reasons Behind the Market Decline
1. Profit Booking Across Sectors
Analysts attributed the sharp fall primarily to profit booking after the recent rally. Thirteen out of sixteen major sectoral indices ended in the red, signalling broad-based weakness.
Heavyweights such as Trent, InterGlobe Aviation and Adani Enterprises declined around 2 percent each. Stocks including JSW Steel, Power Grid Corporation, Mahindra & Mahindra, Bharat Electronics, Asian Paints, Adani Ports, and Jio Financial Services also slipped nearly 1 percent.
However, IT stocks showed relative resilience after gains in U.S. technology shares overnight eased concerns over artificial intelligence-related disruptions.
2. Rising Crude Oil Prices
Crude oil prices remained elevated following a sharp surge in the previous session. Brent crude hovered around $70 per barrel after jumping more than 4 percent, while U.S. crude traded near $65 per barrel.
Rising oil prices tend to pressure India’s trade balance and inflation outlook, often dampening market sentiment. Investors factored in potential supply disruptions linked to geopolitical tensions.
3. Technical Resistance Levels
Market experts highlighted that the Nifty faces strong resistance in the 25,900–26,000 zone. Analysts suggested that a sustained breakout above 26,000 is essential for the next leg of the rally.
Immediate support is seen around 25,700–25,660 levels. Traders indicated that unless Nifty convincingly crosses the resistance band, consolidation or further downside cannot be ruled out.
With global uncertainties persisting, analysts advised selective buying in fundamentally strong stocks rather than aggressive fresh positions.
4. Spike in India VIX and F&O Expiry
The India VIX, a measure of market volatility, rose sharply signalling rising near-term uncertainty. Volatility tends to spike on derivatives expiry days, and February 19 marked the F&O expiry for Sensex contracts.
Higher volatility typically leads to sharper price swings, prompting traders to reduce exposure or hedge positions.
Sectoral Trends and Broader Market Impact
Banking and financial stocks contributed significantly to the decline, dragging the benchmarks lower. Meanwhile, defensive sectors such as IT offered limited support.
Small- and mid-cap stocks witnessed steeper declines compared to large caps, reflecting cautious capital deployment. Analysts noted that participation remains stock-specific rather than broad-based.
Outlook: Cautious Optimism with Volatility
Despite the sharp fall, analysts believe the broader market structure remains constructive, provided key support levels hold. Earnings growth and domestic economic resilience continue to offer medium-term support.
However, traders are advised to remain disciplined and monitor global cues, crude oil movements, and technical breakouts closely.
A decisive move above 26,000 on the Nifty could revive bullish momentum, while failure to hold above support levels may invite further consolidation in the near term.