Markets reel under global shock, banking stocks drag indices lower before late recovery

A sharp wave of selling gripped Dalal Street on Wednesday as global risk aversion intensified, pulling benchmark indices significantly lower through the session before a late recovery trimmed losses.

The BSE Sensex fell over 1,300 points at its lowest point, while the NSE Nifty 50 slipped below the 22,300 mark, reflecting a broad-based sell-off led by financial stocks. The decline came amid heightened geopolitical tensions in West Asia, which pushed crude oil prices higher and weighed on investor sentiment across emerging markets.

Banking and financial counters bore the brunt of the fall, with both private and public sector lenders seeing sustained selling pressure. Market participants pointed to the Reserve Bank of India’s recent tightening in forex derivative norms as an additional overhang on the sector, raising concerns about potential balance sheet stress.

Metal and pharma stocks also traded weak, tracking global cues and concerns around demand softness. In contrast, information technology stocks offered some support in the latter half of the session, aided by currency movements that tend to benefit export-oriented businesses.

Despite the volatility, the market managed to pare a portion of its losses by close, suggesting the presence of selective buying at lower levels. Domestic institutional investors continued to provide a degree of stability, even as foreign investors remained cautious.

The day’s movement underscores a market increasingly sensitive to external triggers, with crude prices, currency shifts and global political developments dictating near-term direction. For now, investors appear inclined to reduce risk, with any recovery likely to remain tentative in the absence of clearer global cues.