Market turnaround: Sensex falls 322 points, Nifty falls below 26,300 as decline in IT sector offsets earnings optimism

Indian shares closed lower on Monday, with losses in IT stocks and renewed worries about additional US tariffs dogging Nifty and Sensex, offsetting a flurry of upbeat business updates that had boosted expectations of stronger quarterly profits.The BSE Sensex fell 322.39 points, or 0.38%, to close at 85,439.62, while the NSE Nifty 50 fell 78.25 points, or 0.30%, to end the session at 26,250.30.

Across the 30-stock Sensex, HDFC Bank, Infosys, HCL Technologies, Bajaj Finance and Tata Consultancy Services led declines, with losses ranging from around 1% to 2%.Mid-cap stocks fell 0.2%, while small-cap stocks outperformed, rising 0.5% on the day.

HDFC Bank, the largest component of the benchmark indices, fell 2.4% after its December business update showed loan growth exceeding deposit growth, raising concerns over funding costs.

IT stocks, which generate a substantial portion of their revenue from the US, fell 1.4% ahead of the sector’s earnings season that starts next week. HCL Technologies fell 2.2%, while Tech Mahindra fell around 1%.

Expert views

Domestic markets started the first full week of 2026 on a cautious footing as Indian 10-year bond yields reflected expectations of higher government borrowings, said Vinod Nair, head of research at Geojit Investments. On the plus side, GST revenues rebounded in December after November’s dip, while the manufacturing PMI moderated but remained firmly in expansionary territory. “Bank credit/progress trends early in Q3 indicate strong momentum, supporting overall optimism. Globally, investors are awaiting key US economic data and Fed guidance, while the BoJ reaffirmed its tightening stance. Looking ahead, Q3 earnings will dominate the focus and drive near-term market trends, with sentiment remaining moderately positive,” Nair said.

Global markets

Global stocks advanced and bond yields were little changed on Monday, while oil prices fell as investors assessed the potential market impact of the US capture of Venezuelan President Nicolás Maduro. Europe’s STOXX benchmark of leading companies rose 0.5%, while MSCI’s broad index of Asia-Pacific shares outside Japan rose 1.3% to a record high. US stock futures also edged higher, with S&P 500 e-minis up 0.2% ahead of a tough set of economic data due this week.

Safe haven government bonds remained stable. The yield on the euro zone’s 10-year German Bund was marginally lower at 2.893%, after rising three basis points last week, while the yield on the 10-year US government bond remained at 4.173%.

Rough impact

Oil prices edged lower on Monday as ample global supplies tempered concerns that the US capture of Venezuelan President Nicolás Maduro could disrupt crude flows from the country with the world’s largest proven reserves.

Brent crude futures fell 23 cents, or 0.4%, to $60.52 a barrel by 0940 GMT, while U.S. West Texas Intermediate crude fell 21 cents, or 0.4%, to $57.11 a barrel.

Rupee vs dollar

The Indian rupee moved lower on Monday to end at 90.2775 against the US dollar, down 0.1% from its previous close, as it followed weakness among its Asian counterparts and faced demand for dollars around the Reserve Bank of India’s benchmark interest rate.

The US dollar index, which measures the greenback against a basket of six major currencies, rose 0.13% to 98.685, extending gains to a sixth straight session.

(with input from agencies)