Markets Give Up Early Gains Amid US-Iran Tensions And Profit Booking

Indian benchmark indices surrendered most of their early gains on Wednesday as profit booking at higher levels, persistent foreign investor selling and weak global cues weighed on sentiment.

The BSE Sensex ended 64.42 points higher, or 0.09%, at 73,983.18 after rising sharply in early trade. The NSE Nifty50 slipped 27.15 points, or 0.12%, to close at 23,214.95.

The broader market underperformed benchmark indices. The Nifty Midcap 100 and Nifty Smallcap indices both ended more than 1% lower, indicating selling pressure across the broader market.

Among Sensex constituents, Hindustan Unilever, Axis Bank and Kotak Mahindra Bank emerged as the top gainers, helping limit losses in the benchmark indices.

Profit Booking And Global Cues

Markets started the session on a positive note but failed to sustain gains as investors booked profits following recent advances.

The pullback came a day after the Sensex rallied 394.50 points and the Nifty gained 119.10 points, prompting traders to lock in gains at higher levels.

Analysts said the lack of fresh positive triggers and caution ahead of key US inflation data also contributed to the reversal.

Global sentiment remained subdued amid renewed geopolitical tensions and weakness across major Asian markets.

South Korea's Kospi, Japan's Nikkei 225, China's Shanghai Composite and Hong Kong's Hang Seng index all ended lower. US markets had closed mostly in the red overnight, while Wall Street futures also pointed to a weak opening.

Fresh tensions between the US and Iran added to investor nervousness after Washington launched strikes against Iranian targets following reports that Tehran had downed a US Apache helicopter in the Strait of Hormuz.

Meanwhile, Brent crude rose 0.5% to around $92 per barrel after hitting a seven-week low in the previous session.

FII Selling Continues

Foreign Institutional Investors remained net sellers in the Indian market, further weighing on sentiment.

FIIs sold equities worth ₹4,566.03 crore on Tuesday, extending the trend of sustained overseas outflows that has persisted through much of 2026.

Market participants said continued foreign selling remains a key overhang despite improving domestic liquidity conditions and supportive RBI measures announced last week.

FMCG And Private Banks Outperform

Despite the broader weakness, FMCG stocks stood out as the best-performing segment. The Nifty FMCG index gained more than 1%, supported by expectations of price increases and improving earnings visibility.

Private banking stocks also witnessed buying interest after the Reserve Bank of India eased norms related to FCNR(B) deposits and External Commercial Borrowings (ECB), which are expected to improve liquidity and funding flexibility.

Vinod Nair, Head of Research at Geojit Investments, said domestic equities turned cautious ahead of a key US inflation reading that could influence the Federal Reserve's policy outlook.

"Domestic equities ended lower amid weak global cues, as investors turned cautious ahead of a key US inflation print likely to influence the Fed's policy trajectory. Early gains were reversed due to profit booking, while subdued oil prices, despite fresh geopolitical developments, offered limited support," he said.

Nair added that FMCG stocks benefited from expectations of price hikes, while private banks gained after the RBI's regulatory easing measures. However, slower mutual fund inflows and geopolitical uncertainties continued to create pressure on equities.

Technical Outlook

According to Vatsal Bhuva, Technical Analyst at LKP Securities, Bank Nifty continues to maintain a constructive short-term structure despite facing resistance near higher levels.

"Bank Nifty has witnessed a contracting wedge pattern breakout on the hourly chart, indicating a positive short-term setup. However, the index faced selling pressure near its swing high resistance zone of 55,500-55,600," he said.

Bhuva noted that the index continues to trade above its 20-day and 50-day moving averages, while the RSI remains above the 50 mark, indicating improving momentum.

He expects the short-term outlook to remain bullish, with support at 54,800 and 54,500. A decisive breakout above the 55,600 level could open the door for an advance towards 56,300, he added.