IT rally fails to save Nifty as index hits 5-month low on expiry day

Indian equities extended their decline for a third straight session on Tuesday, with the Nifty 50 falling 1.19% to 23,118.60, its lowest close in five months, as rising crude prices and global bond yields weighed on investor sentiment. The broader market came under sharper pressure, while IT stocks emerged as a notable exception.

The Sensex fell 1.04% to 74,003.82, while the Nifty Bank declined 1.43%. The Nifty Midcap 100 and Smallcap 100 fell 2.12% and 2.43%, respectively, highlighting the intensity of the selling beyond large caps. The Nifty Microcap 250 was down 3.27%.

Market breadth was firmly negative, with declines outnumbering advances by roughly 5:1, while 40 of the 50 Nifty stocks ended lower.

Oil, yields weigh on sentiment

The sell-off came as Brent crude climbed above $107 a barrel, amid heightened geopolitical concerns and disruptions around key energy infrastructure. At the same time, the US 10-year Treasury yield crossed the 5% mark, raising concerns over global borrowing costs and inflation.

With the Federal Reserve’s policy decision due this week, investors are also assessing the possibility of tighter monetary policy for longer. Higher US yields and elevated oil prices are particularly negative for oil-importing economies such as India.

Financials and autos were among the biggest sectoral drags, with the Nifty Financial Services index down 1.83% and Nifty Auto falling 2.01%.

Defence, capital goods stocks hammered

Selling was particularly sharp in defence and capital-goods stocks.

BEL fell 5.30%, making it the worst-performing Nifty stock, while concerns around the broader defence pack also weighed on sentiment. The Nifty India Defence index fell more than 4% during the session, with several stocks declining sharply. 

Solar Industries was among the biggest drags on the defence pack, with the stock falling 14% after the company announced a $1.355-billion (about ₹12,951 crore) all-cash acquisition of South Africa-based Omnia Holdings. Omnia operates in 23 countries and reported revenue of about $1.41 billion for FY26. The sharp fall indicates concerns over the scale of the cash outlay and its impact on Solar’s balance sheet, even as the company sees the acquisition creating a larger integrated global blasting-solutions platform.

Among other major Nifty losers, Shriram Finance fell 4.74%, Adani Enterprises 4.29%, IndiGo 3.96% and Grasim 3.38%. JSW Steel, Titan, Bajaj Finserv and Adani Ports were also among the major drags.

IT bucks broader sell-off

IT stocks provided a rare bright spot in an otherwise weak market. The Nifty IT index gained 2.19%, with all five of the top Nifty gainers coming from the technology sector.

HCLTech rose 3.95%, Infosys 3.79%, TCS 2.28%, Tech Mahindra 2.26% and Wipro 1.55%.

The gains came as investors reassessed concerns around the pace of AI-led disruption following calls from some industry executives for slower and more regulated development of frontier AI models. 

HDFC Bank was another notable gainer, rising 1.17%, while ONGC advanced 1.48%.