Indian equity benchmarks experienced significant selling pressure on Monday as heavyweight stocks declined following a fresh round of Q3 earnings announcements. The market sentiment turned risk-off as investors reacted negatively to quarterly results from major index constituents, pushing the Nifty below the psychologically important 25,600 level.

Market Performance Overview

The benchmark indices closed with substantial losses across the board. The broader market indices also remained under pressure, reflecting widespread weakness in investor sentiment.

Major Drags on Benchmark Performance

Reliance Industries and ICICI Bank emerged as the biggest drags on the benchmarks following their December-quarter results. The market's reaction to these earnings highlighted investor concerns about the performance of these heavyweight stocks.

Wipro stood out as the top Nifty loser, declining 4% after the IT major issued guidance that fell short of market expectations for the March quarter. This development added to the overall negative sentiment in the technology sector.

Sectoral Performance and Market Breadth

The market witnessed broad-based selling with more than 30 Nifty constituents ending in negative territory. This widespread decline underscored the risk-off sentiment that dominated trading sessions. Sectoral performance remained broadly weak, with most indices closing lower except for FMCG and auto stocks, which managed to buck the negative trend.

Market breadth remained heavily skewed towards declines, with the NSE advance-decline ratio standing at 1:3, indicating that for every stock that gained, three stocks declined.

Notable Gainers Despite Market Weakness

Despite the overall negative sentiment, several stocks managed to post gains. InterGlobe Aviation emerged as the top Nifty gainer, rising 4% even after the DGCA imposed a penalty related to December flight disruptions.

Midcap Movements and Sector-Specific Developments

In the midcap segment, JSW Infrastructure surged 6% following its quarterly results, demonstrating that strong earnings could still drive individual stock performance despite broader market weakness. However, MRPL dropped over 5% after announcing a halt in Russian crude imports, reflecting sector-specific challenges.

Punjab National Bank experienced volatility, slipping nearly 6% from intraday highs after its Q3 numbers disappointed market expectations, highlighting the mixed nature of earnings results across the banking sector.

A key equity derivatives indicator is signaling heightened caution among traders as persistent foreign selling and US-India tariff uncertainty weigh on market sentiment. The Nifty Put-Call Ratio has dropped significantly, reflecting changing trader positioning amid ongoing market volatility.

Sharp Decline in Put-Call Ratio

The Put-Call Ratio on Nifty has fallen to 0.65 from 1.67 at the beginning of January, when Nifty achieved its closing high. This dramatic shift indicates rapid unwinding of supportive put positions and introduction of fresh call writing, according to technical analysts.

While a lower PCR typically suggests bullishness as it indicates more call activity than put activity, the current market dynamics present a different scenario. In choppy markets, declining PCR often reflects traders positioning for capped upside by selling call options rather than outright bullish sentiment.

Foreign Investor Positioning Turns Bearish

Foreign portfolio investors have adopted an overwhelmingly bearish stance, with positioning data revealing stark sentiment shifts. The FPI long-short ratio shows extreme bearish positioning among international investors.

This dramatic skew toward short positions underscores the cautious approach foreign investors are taking amid current market uncertainties and potential policy changes.

Technical Analysis and Market Outlook

Technical analysts view the current PCR level as indicative of trader caution rather than outright bearishness. The 0.65 reading suggests the market is approaching oversold territory, with historical patterns showing consistent bottoms when PCR dips toward the 0.60-0.65 zone.

Key technical levels and expectations include:

• Resistance Level: 25,900 (50% retracement of previous rally)
• Support Zone: PCR improvement to 0.8 or higher needed for sustained recovery
• Historical Pattern: Market typically bottoms at 0.60-0.65 PCR and tops above 1.30

Analysts expect Nifty to remain under pressure unless it achieves a decisive close above 25,900 levels or until the PCR shows meaningful improvement.

Market Sentiment Indicators

The shift in derivatives positioning over the past three weeks reflects broader market uncertainty. Traders are pricing in near-term risks while maintaining cautious positioning strategies. The Volatility Index rise of 16.4% to 11.30 confirms heightened risk awareness among market participants.

Some analysts interpret the current PCR level as a contrarian indicator, suggesting the sentiment shift from extreme bullishness to caution typically marks where healthy markets find support. However, sustained recovery will require improvement in both technical positioning and broader market fundamentals.