India's stock markets fell sharply on Wednesday, wiping out about Rs. 5 lakh crore in investor wealth as benchmark indices BSE Sensex and Nifty 50 closed deep in the red after a brief recovery in the previous session.

The Sensex dropped 1,342 points, or 1.72%, to close at 76,863. The Nifty 50 declined 395 points, or 1.63%, ending the day at 23,866. The fall came just a day after markets had recovered from Monday's losses, but selling pressure returned strongly during Wednesday's trading.

Broad-based selloff across sectors

The decline was not limited to the benchmark indices. Broader markets also came under pressure. The BSE Midcap Index fell 1.13%, while the BSE Smallcap Index slipped 0.32%.

Most sectoral indices on the Nifty ended the session in negative territory. Key sectors, including auto, private banks, financial services, banking, realty, and defence, recorded notable declines. However, a few sectors managed to stay positive. Pharma, energy, oil, and gas indices on the Nifty closed with gains.

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Market analysts said profit booking played a major role in the sharp fall. After Tuesday's recovery, many investors chose to sell shares and lock in gains. The selling pressure was especially visible in heavyweight stocks, which dragged the benchmark indices lower.

Foreign outflows and global tensions weigh

Other economic factors also added to the negative sentiment in the market. The Indian rupee weakened on Wednesday, falling 24 paise against the US Dollar to close at 92.04.

Foreign investment outflows have also increased in recent days. During the first six trading sessions of March, Foreign Institutional Investors (FIIs) withdrew around Rs. 32,800 crore from Indian equities. Analysts said the continued outflow of foreign funds has affected both the currency and the stock market.

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Global geopolitical tensions have further added to the uncertainty. Escalating conflict involving Israel, the United States, and Iran in West Asia has increased volatility in global energy markets. Fluctuations in crude oil prices have also weighed on investor sentiment.

Analysts said the combined impact of profit booking, foreign fund outflows, currency weakness, and geopolitical instability contributed to the sharp fall in Indian equities during Wednesday’s session.

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