Market Update February 4, 2026: Sensex Weakens After Rally, Nifty Below 25,750 as Global Tech Stocks Drag Indices

Indian equity markets showed notable volatility on Wednesday, retracing some of the gains from the previous session that had been driven by strong optimism around the recently announced India-US trade accord. The benchmark Sensex slipped sharply from its highs and traded lower by more than 450 points, while the Nifty 50 index fell below the 25,750 mark in mid-session trade, as information technology stocks recorded steep losses amid a broader global sell-off in tech shares.

The downturn at Dalal Street followed the previous day’s record rally that had been sparked by U.S. President Trump’s announcement of a trade agreement with India. Under the accord, the United States agreed to reduce reciprocal tariffs on Indian imports from 25 percent to 18 percent, a move seen by investors as supportive of Indian exports and long-term growth prospects.

Despite the earlier surge in sentiment, Wednesday’s session opened on a cautious note. At the outset, the rupee traded weaker against the dollar, mirroring tentative investor appetite after a strong rebound in the previous session. Amid global pressure on technology stocks, the IT index fell by nearly 6 percent, offsetting gains in energy, auto and metals sectors that had been supported by rising commodity prices and solid corporate earnings.

Sector movements were mixed, with energy names showing resilience as crude oil prices climbed on renewed Middle East tensions. Banking and financial stocks showed modest strength, while several export-oriented and cyclical counters held up better due to positive expectations around the trade deal and improved foreign investor flows.

The rupee registered its strongest one-day gain in seven years following the trade announcement before retreating slightly today, reflecting mixed signals from global markets and profit-booking after the prior session’s sharp rally. Economic analysts noted that while lower tariffs and anticipated foreign investment inflows could support growth and exports, markets remained sensitive to global cues and sector-specific headwinds.

In commentary on the tariff reduction, Finance Minister Nirmala Sitharaman highlighted expectations of wider export opportunities and stronger capital inflows, with economists suggesting a modest uplift to India’s GDP from the improved trade environment.

Market participants will closely watch earnings trends and upcoming macroeconomic data to assess whether the current retreat represents a temporary correction or signals deeper consolidation after recent volatility.