Indian equity benchmarks remained under heavy selling pressure on Wednesday, with both the Nifty and Sensex settling sharply lower amid escalating tensions in the Middle East after U.S. and Israeli forces attacked targets in Tehran, Iran. Markets made a gap-down opening amid FII outflows and broad-based selling across sectors. In afternoon session, gains in IT stocks helped the indices pare some losses, but finally closed the session deep in the red. 

Some of the important factors in trade:

Persistent FIIs outflows: Continued foreign fund outflows kept markets sentiments subdued, with foreign institutional investors (FIIs) offloading net sellers of shares worth Rs 3,295.64 crore on Monday.

HSBC India Services PMI slips to 58.1 in February: Traders took note that the HSBC India Services Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 58.1 in February from 58.4 in January.

IIP growth slows to 4.8% in January from 7.8% in December: Traders were also concerned as the government data showed that Index of Industrial Production (IIP) recorded a 4.8% year-on-year growth in January 2026, which is lower than 7.8% (Quick Estimate) growth in the month of December 2025. 

On the global front: European equity markets traded in the green after the HCOB Eurozone services PMI business activity index rose from 51.6 in January to 51.9, hitting two-month high and matching expectations. Asian markets ended lower, due to escalating Middle East conflict. 

The BSE Sensex ended at 79116.19, down by 1122.66 points or 1.40% after trading in a range of 78443.20 and 79527.41. There were 3 stocks advancing against 27 stocks declining on the index. (Provisional)

The only gaining sectoral indices on the BSE was TECK up by 0.48%, while Metal down by 4.00%, Oil & Gas down by 3.56%, Industrials down by 3.29%, Realty down by 3.16%, and Basic Materials down by 3.12% were the top losing indices on BSE. (Provisional)

The few gainers on the Sensex were Bharti Airtel up by 1.78%, Infosys up by 1.50% and Tech Mahindra up by 0.51%. On the flip side, Tata Steel down by 6.76%, Larsen & Toubro down by 4.53%, Bajaj Finance down by 3.36%, Ultratech Cement down by 3.32% and NTPC down by 3.07% were the top losers. (Provisional)

Meanwhile, India and Canada have launched formal negotiations for a Comprehensive Economic Partnership Agreement (CEPA) with an aim to fast-track free trade agreement (FTA). The Terms of Reference (ToR) for the agreement was signed by Commerce and Industry Minister Piyush Goyal and his Canadian counterpart Maninder Sidhu in the presence of Prime Minister Narendra Modi and Prime Minister Mark Carney of Canada at Hyderabad House. 

The ToR of negotiations will provide format, frequency, and approach to the CEPA negotiations. It will serve as a guide to facilitate negotiations in order to conclude an ambitious, balanced and mutually beneficial pact. Both the sides are looking to finalise the pact soon. Prime Minister Narendra Modi said the two countries have set a target of achieving $50 billion in bilateral trade by 2030 and underlined the need to unlock the full potential of economic cooperation through an early conclusion of the CEPA. Carney described the move as an expansion of a valued partnership with ‘new ambition, focus and foresight’.

The proposed agreement will cover trade in goods and services, along with other mutually agreed policy areas. Bilateral trade between India and Canada stood at $8.66 billion in FY 2024-25, with India exporting goods worth $4.22 billion and importing $4.44 billion. India’s key exports to Canada include pharmaceuticals, iron and steel, seafood, cotton garments, electronic goods and chemicals. Major imports from Canada include pulses, pearls and semi-precious stones, coal, fertilisers, paper and crude petroleum.

The CNX Nifty ended at 24480.50, down by 385.20 points or 1.55% after trading in a range of 24305.40 and 24602.45. There were 4 stocks advancing against 46 stocks declining on the index. (Provisional)

The few gainers on Nifty were Coal India up by 2.09%, Bharti Airtel up by 1.75%, Infosys up by 1.44% and Tech Mahindra up by 0.43%. On the flip side, Tata Steel down by 6.77%, Tata Motors Passenger down by 5.23%, SBI Life Insurance down by 5.00%, Larsen & Toubro down by 4.53% and JSW Steel down by 4.28% were the top losers. (Provisional)

European markets were trading higher; Germany’s DAX gained 307.85 points or 1.28% to 24,098.50, France’s CAC rose 72.46 points or 0.89% to 8,176.30 and UK’s FTSE 100 increased 44.66 points or 0.42% to 10,528.79.

Asian markets settled lower on Wednesday tracking Wall Streets’ fall overnight as investors monitored developments in the Middle East. Market sentiments weakened on concerns that rising energy prices, fuelled by the US and Israel’s escalating conflict with Iran, could slow economic growth and stoke inflation. Chinese and Hong Kong shares tumbled amid mixed Chinese PMI data. Official data showed Chinese manufacturing and services sectors contracted for a second consecutive month in February, while a private survey indicated that both manufacturing and services activity accelerated last month. Further, investors were keeping close eye on the annual National People’s Congress with expectations for a 4.5% to 5% growth target for 2026 and details on the 15th Five-Year Plan (2026–2030). Japanese shares fell as the Iran conflict escalates. Bank of Japan Governor Kazuo Ueda warned that the Middle East conflict could significantly affect Japan’s economy, signalling the central bank is likely to keep rates steady for an extended period. Kospi plunged more than 12%, recording its largest-ever daily loss, with Samsung Electronics and SK Hynix taking the hardest hit. The market participants overlooked the report saying Trump vowed that the US Navy would begin escorting oil tankers and other commercial vessels through the Strait of Hormuz if necessary to ensure the ‘free flow of energy to the world’.