Indian equity benchmarks witnessed heavy selling pressure on Wednesday, with both the Nifty and Sensex settling with cut of over 1.7%, dragged by heavy selling in banking and auto sector stocks. Markets made a cautious start, and soon indices extended losses. Markets remained under pressure throughout the session amid rising geopolitical uncertainty in West Asia and continued foreign fund outflows.

Some of the important factors in trade:

ICRA sees downside risk to India’s FY2027 growth projection: Some cautiousness came as ICRA said escalating conflict in West Asia could pose downside risks to India's economic growth outlook if the conflict persists. It expects India's real GDP growth to be around 7.1 per cent in FY27, slightly lower than the 7.6 per cent estimated for FY26. 

Sustained foreign fund outflows: Sentiments remained downbeat as FIIs offloaded equities worth Rs 4,672.64 crore on Tuesday, according to exchange data.

Govt revises fiscal deficit upward for FY23-FY25: Traders took note of Minister of State for Finance Pankaj Chaudhary’s statement that the fiscal deficit as a percentage of GDP has been revised upwards for the fiscal years 2022-23, 2023-24, and 2024-25.

On the global front: European equity markets traded in the red after crude oil prices regained strength despite reports indicating the International Energy Agency (IEA) proposed the largest release of oil reserves in its history to offset supply disruptions stemming from the war on Iran. Asian markets ended mostly in green, as investors awaited signals on end of the Iran conflict.

The BSE Sensex ended at 76863.71, down by 1342.27 points or 1.72% after trading in a range of 76759.26 and 78324.37. There were 2 stocks advancing against 28 stocks declining on the index. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.46%, Utilities up by 0.31%, Energy up by 0.12%, Healthcare up by 0.08% and Power up by 0.04%, while Auto down by 3.06%, Bankex down by 2.06%, Consumer Disc down by 1.89%, Realty down by 1.70%, TECK down by 1.63% were the losing indices on BSE. (Provisional)

The only gainers on the Sensex were Sun Pharma up by 0.41% and NTPC up by 0.32%. On the flip side, Bajaj Finance down by 5.14%, Axis Bank down by 4.64%, Bajaj Finserv down by 3.78%, Mahindra & Mahindra down by 3.68% and Kotak Mahindra Bank down by 3.02% were the top losers. (Provisional)

Meanwhile, The Reserve Bank of India (RBI) has limited the maximum dividend banks can pay to their shareholders at 75% of profit after tax (PAT). The new norms will come in effect from the financial year (FY) 2026-27. Following the consultations with stakeholders, the RBI has issued the Reserve Bank of India (Commercial Banks - Prudential Norms on Declaration of Dividend and Remittances of Profits) Directions, 2026.

Under these norms, the regulatory capital of the bank should not fall below the applicable regulatory capital requirement even after the payment of dividends. Further, a foreign bank operating in India in branch mode should have positive PAT for the period for which the profits are to be remitted to the Head Office. 

The RBI has also issued prudential norms on declaration of dividend for small finance banks, local area banks, payment banks, and regional rural banks. Meanwhile, the combined net profit of all scheduled commercial banks (SCBs) grew 14.8% year-on-year to Rs 4.01 lakh crore during FY25, with the return on assets (RoA) at 1.4% and return on equity (RoE) at 13.5%.

The CNX Nifty ended at 23866.85, down by 394.75 points or 1.63% after trading in a range of 23834.30 and 24299.00. There were 9 stocks advancing against 41 stocks declining on the index. (Provisional)

The top gainers on Nifty were JIO Financial Services up by 1.14%, Dr. Reddy's Lab up by 0.83%, Sun Pharma up by 0.72%, Coal India up by 0.72% and NTPC up by 0.69%. On the flip side, Bajaj Finance down by 4.91%, Axis Bank down by 4.48%, Bajaj Finserv down by 3.88%, Mahindra & Mahindra down by 3.81% and Eicher Motors down by 3.76% were the top losers. (Provisional)

European markets were trading lower; Germany’s DAX lost 345.33 points or 1.44% to 23,623.30, France’s CAC fell 68.96 points or 0.86% to 7,988.40 and UK’s FTSE 100 decreased 88.1 points or 0.85% to 10,324.14.