Indian equities extended their decline for the third consecutive session on Wednesday, with the BSE Sensex falling over 1,144 points in three days and the NSE Nifty 50 dropping nearly 1% over the same period. What began as a narrow pullback has transformed into a sharper retreat, leaving both benchmarks firmly in negative territory for the week.

Market Performance Overview

The selling pressure intensified on Wednesday, with both indices trading significantly lower during afternoon sessions. The decline marks a substantial correction from recent highs, driven by multiple headwinds affecting investor sentiment.

Key Factors Behind Market Decline

Heavyweight Stock Selling Pressure

Losses in index heavyweights continued to exert disproportionate pressure on benchmark indices. Major constituents faced significant selling, with HDFC Bank shares declining 1.70% on Wednesday while Reliance Industries slipped 0.40%. Trent witnessed a sharp 1.40% fall after plunging 8.60% in the previous session amid retail segment competition concerns.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that recent market movements lack clear direction, with actions in mega stocks influencing the overall market disproportionately. He emphasized that sharp declines in Reliance and HDFC Bank are more technical in nature rather than fundamental concerns.

Venezuela Crisis and Geopolitical Tensions

Global risk appetite suffered a significant blow due to political upheaval in Venezuela, creating uncertainty around petroleum reserves. The crisis escalated following a controversial U.S. military operation that led to the capture of President Nicolas Maduro and his wife by U.S. special forces, with Maduro currently held in a New York jail.

Dr. Vijayakumar highlighted the potential for continued high volatility, noting that Trump-related actions and a possible Supreme Court verdict on tariffs could create substantial market fluctuations.

Weak Global Cues and Asian Market Selloff

Indian markets tracked declines across Asian markets, where investors grappled with ramifications of the Venezuela crisis and global energy supply uncertainties. Japanese equities particularly weighed on regional benchmarks after China announced a ban on dual-use item exports to Japan following remarks by Japanese Prime Minister Sanae Takaichi on Taiwan.

Technical Analysis and Market Outlook

Technical indicators suggest the recent decline represents a corrective or consolidation phase rather than a breakdown in the longer-term trend, though elevated volatility remains a near-term risk.

Jaykrishna Gandhi, Head of Business Development at Emkay Global, noted that the Nifty has completed a 1-1.5 year time correction, which historically precedes bullish trend resumption. He highlighted that post-2009 corrections have shifted from sharp price declines to time-wise consolidations, reflecting improved structural strength.

Anand James, Chief Market Strategist at Geojit Investments, pointed to mixed technical signals, with Friday's strong close near the upper Bollinger band suggesting upside momentum continuation, though VIX near record levels indicates potential volatility spikes.

Sectoral Performance and Investment Flows

Despite broad market weakness, certain sectors demonstrated resilience. The pharmaceutical sector showed particular strength, with Nifty Pharma confirming a breakout from an inverted head and shoulder pattern, indicating bullish continuation potential.

Institutional activity reflected mixed sentiment, with foreign portfolio investors remaining net sellers while domestic institutional investors provided support through continued buying, helping cushion the market decline during the correction phase.

Indian equity benchmarks extended their decline for the second consecutive session on Tuesday, closing lower on expiry day. The Nifty slipped below its immediate support near the 26,200 mark, with analysts maintaining that the index continues to hold a positive bias despite the recent weakness.

Market Performance Overview

The Nifty opened at 26,189.70 and staged a quick rebound within the first hour, climbing to an intraday high of 26,273.00. However, selling pressure returned in the afternoon, pulling the index down nearly 150 points from the day's high to an intraday low of 26,124.00 around 2:30 p.m.

Technical Analysis and Market Outlook

Rajesh Bhosale of Angel One emphasized that from a technical standpoint, the Nifty continues to hold above the breakout zone and remains above key short-term moving averages, thereby maintaining a positive bias. The index has formed a high wave candle with a lower high and lower low, signaling consolidation with corrective bias around the all-time high.

Analysts advise traders to use the brief consolidation as a buy-on-dips approach, as long as the index sustains above the support area of 26,000-25,900.

Sectoral Performance and Top Movers

The PSU Bank segment stood out as the star performer within the Nifty Bank sector, outperforming private banks. Most sectoral indices rose with Nifty Pharma and Nifty PSU Bank leading the gains, while Nifty Oil & Gas and Nifty Media were among the losers.

Apollo Hospitals emerged as the top Nifty gainer, surging 3.50%, while ICICI Bank and Tata Consumer Products led the charge among frontline stocks. On the downside, Trent witnessed the steepest decline, plummeting 8.46% following its weak quarterly business update.

Market Breadth and Broader Indices

The broader market corrected in tandem with benchmarks, as the Nifty Midcap 150 ended 0.20% lower and the Nifty Smallcap 250 closed 0.31% lower. Market breadth was skewed in favor of sellers, with 1,735 stocks declining, 1,500 advancing, and 195 remaining unchanged on the BSE.

Bajaj Broking Research noted that Bank Nifty formed a small bull candle with shadows in either direction, signaling consolidation amid stock-specific action around the all-time high. Despite the near-term consolidation, the broader positional trend remains bullish as the Nifty continues to trade above key moving averages.