Indian equity markets witnessed a sharp pullback on Tuesday, ending a three-day rally that followed optimism around the India–US trade deal. After the recent rise, investors turned cautious and booked profits at higher levels, leading to a broad-based sell-off across sectors. Both benchmark indices, the Sensex and the Nifty50, slipped over half a percent, reflecting pressure not only in heavyweight stocks but also across mid-cap and small-cap segments.

The decline was driven largely by profit booking and continued weakness in IT stocks. Technology shares remained under pressure after a sharp fall in the previous session, mirroring global tech sell-offs amid concerns that rapid advances in artificial intelligence and automation could impact traditional IT outsourcing models. Market experts noted that fears around margin pressure for Indian IT companies have weighed on sentiment, even though the actual impact of these technologies remains uncertain.

Broader markets also underperformed, with small-cap stocks seeing deeper losses than large-caps. Most sectoral indices traded in the red, though pockets of strength were visible in select PSU banking and healthcare stocks. Despite the day’s fall, volatility remained muted, suggesting the absence of panic selling.

Market strategists believe the current decline reflects a consolidation phase after the recent rally rather than a change in the long-term trend. As long as key support levels on the Nifty hold, experts continue to see opportunities for buying on dips. Domestic consumption-driven sectors such as banking, autos, telecom and select industrial stocks are expected to remain supported by India’s strong growth outlook, supportive policy measures and a relatively low interest rate environment.