FPJ News Service mumbai

Indian equities extended their retreat on Tuesday as a softening rupee and sustained foreign investor outflows dampened sentiment, prompting traders to lock in gains after the previous session’s record highs.

Heavy selling in blue-chip and banking counters dragged the 30-share BSE Sensex down 503.63 points to close at 85,138.27. Earlier in the day, the benchmark slid 588.9 points to a low of 85,053, reversing sharply from Monday’s intra-day peak. The NSE Nifty50 declined 143.55 points to end at 26,032.20.

Market participants pointed to the NSE’s sectoral index overhaul—undertaken to comply with revised SEBI rules—as a catalyst for pressure in major banking stocks. “The reshuffle has triggered corrective moves across heavyweight financial names. In the near term, waning expectations of an RBI rate cut, given the strength of India’s latest GDP numbers, and uncertainty clouding US–India trade negotiations, are likely to keep sentiment cautious.

However, robust domestic macro fundamentals and an improving earnings outlook for the latter half of FY25–26 should provide a measure of stability,” said Vinod Nair, Head of Research at Geojit Investments. Bajaj Broking Research also flagged the double headwinds of firm GDP data reducing the likelihood of imminent monetary easing, and lingering ambiguity around trade talks with Washington.

Dr V.K. Vijayakumar, a veteran market strategist, described the current phase as a “healthy consolidation” near historic highs. “Fundamentals support the possibility of fresh records, as reflected in strong GDP performance and buoyant November auto sales. The rupee’s persistent weakness, however, remains a clear dampener by choking FII inflows,” he said. A balanced trade accord with the United States, he added, could alleviate currency pressures.

He advised investors to use the consolidation window to gradually accumulate fairly valued large-caps and growth-oriented mid-caps, while exercising caution in the overstretched small-cap space. Banks, aided by valuation comfort and improving credit demand, may continue to anchor market resilience. Elsewhere in Asia, Shanghai’s SSE Composite closed lower, while South Korea’s Kospi, Japan’s Nikkei 225 and Hong Kong’s Hang Seng ended in positive territory.