Sensex, Nifty slip after three-day climb: What's weighing on markets?
The broader market underperformed the frontline indices, with the Nifty Midcap index declining 0.71 per cent and the Nifty Smallcap index tumbling 1.58 per cent.
- Feb 5, 2026,
- Updated Feb 5, 2026 12:37 PM IST
Indian equity benchmarks snapped their three-session winning streak in Thursday's afternoon trade, slipping sharply amid profit booking and weak global cues. The 30-share BSE Sensex pack and the NSE Nifty50 barometer were down 0.59 per cent and 0.61 per cent, respectively, at the last check.
The broader market underperformed the frontline indices, with the Nifty Midcap index declining 0.71 per cent and the Nifty Smallcap index tumbling 1.58 per cent.
Market participants attributed the pullback to a mix of global uncertainty, lack of clarity on trade-related developments and continued pressure on IT stocks.
Abhishek Basumallick, Co-founder & Fund Manager at Shree Rama Managers, said multiple uncertainties are weighing on sentiment. "The details of the India–US deal are not very clear. There is also some fear stemming from the US side or pronouncements from the US side, with statements suggesting that India may import agricultural goods, which remains a grey area for now. In addition, overall sentiment is at risk as people are uncertain about what is happening in the US economy. This uncertainty is an overhang, especially after the sharp correction seen in IT stocks over the last one to two days. The key concern is how this impacts US markets and whether there could be a spillover effect on global markets. Several factors are making the situation murky," he told Business Today.
Kranthi Bathini, Equity Strategist at WealthMills Securities, said the decline largely reflects near-term profit booking. "We are witnessing some kind of profit booking following a three-session strong upmove. For now, markets are in a 'buy-on-dip' and 'sell-on-rally' mode," he said.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed to sharp internal churn within the indices, particularly due to weakness in technology stocks. "There are a few near-term market trends that are significant. The Nifty appears to be in a consolidation phase without big moves at the index level. However, there are big changes within the Nifty stocks with big declines in IT stocks consequent to the IT sell off in the US spreading to India, too. The sell off has been triggered by Anthropic's new automation tools that the market fears may replace IT services that are presently outsourced. The market fears significant margin pressure for Indian IT companies. What the real impact will be remains to be seen," he said.
He added, "In contrast to the weakness in IT stocks, the large domestic consumption-driven segments are doing well and this is reflected in the resilience of leaders like RIL, Bharti, the banking majors and some auto stocks. After the growth-oriented Budget and trade deals with the EU and US, India's growth will remain strong facilitating strong domestic consumption. The low-interest rate regime continues to support the growth of the auto sector and is likely to spill over into segments like air conditioners as summer approaches. Therefore, the strong domestic consumption story is likely to sustain the resilience of the domestic consumption-driven stocks. If the cessation of selling and marginal buying by FIIs becomes a trend, the market will gain strength. This is the data point to watch for."
Ponmudi R, CEO of Enrich Money, said markets are entering a phase of cautious consolidation after recent gains. "Weak follow-through at higher levels and continued pressure on IT stocks -- driven by global technology weakness, AI-related concerns, and lingering uncertainty over the outcome of the US–Iran talks -- are weighing on sentiment. Selective profit booking and range-bound trade appear natural after the recent advance. That said, improving trade relations, a recovery in the Indian rupee against the US dollar from its all-time low, and recent foreign portfolio investor activity are offering some near-term support to market sentiment," he further stated.
Indian equity benchmarks snapped their three-session winning streak in Thursday's afternoon trade, slipping sharply amid profit booking and weak global cues. The 30-share BSE Sensex pack and the NSE Nifty50 barometer were down 0.59 per cent and 0.61 per cent, respectively, at the last check.
The broader market underperformed the frontline indices, with the Nifty Midcap index declining 0.71 per cent and the Nifty Smallcap index tumbling 1.58 per cent.
Market participants attributed the pullback to a mix of global uncertainty, lack of clarity on trade-related developments and continued pressure on IT stocks.
Abhishek Basumallick, Co-founder & Fund Manager at Shree Rama Managers, said multiple uncertainties are weighing on sentiment. "The details of the India–US deal are not very clear. There is also some fear stemming from the US side or pronouncements from the US side, with statements suggesting that India may import agricultural goods, which remains a grey area for now. In addition, overall sentiment is at risk as people are uncertain about what is happening in the US economy. This uncertainty is an overhang, especially after the sharp correction seen in IT stocks over the last one to two days. The key concern is how this impacts US markets and whether there could be a spillover effect on global markets. Several factors are making the situation murky," he told Business Today.
Kranthi Bathini, Equity Strategist at WealthMills Securities, said the decline largely reflects near-term profit booking. "We are witnessing some kind of profit booking following a three-session strong upmove. For now, markets are in a 'buy-on-dip' and 'sell-on-rally' mode," he said.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed to sharp internal churn within the indices, particularly due to weakness in technology stocks. "There are a few near-term market trends that are significant. The Nifty appears to be in a consolidation phase without big moves at the index level. However, there are big changes within the Nifty stocks with big declines in IT stocks consequent to the IT sell off in the US spreading to India, too. The sell off has been triggered by Anthropic's new automation tools that the market fears may replace IT services that are presently outsourced. The market fears significant margin pressure for Indian IT companies. What the real impact will be remains to be seen," he said.
He added, "In contrast to the weakness in IT stocks, the large domestic consumption-driven segments are doing well and this is reflected in the resilience of leaders like RIL, Bharti, the banking majors and some auto stocks. After the growth-oriented Budget and trade deals with the EU and US, India's growth will remain strong facilitating strong domestic consumption. The low-interest rate regime continues to support the growth of the auto sector and is likely to spill over into segments like air conditioners as summer approaches. Therefore, the strong domestic consumption story is likely to sustain the resilience of the domestic consumption-driven stocks. If the cessation of selling and marginal buying by FIIs becomes a trend, the market will gain strength. This is the data point to watch for."
Ponmudi R, CEO of Enrich Money, said markets are entering a phase of cautious consolidation after recent gains. "Weak follow-through at higher levels and continued pressure on IT stocks -- driven by global technology weakness, AI-related concerns, and lingering uncertainty over the outcome of the US–Iran talks -- are weighing on sentiment. Selective profit booking and range-bound trade appear natural after the recent advance. That said, improving trade relations, a recovery in the Indian rupee against the US dollar from its all-time low, and recent foreign portfolio investor activity are offering some near-term support to market sentiment," he further stated.