19 February 2026 (Navroze Bureau) : Indian equity markets witnessed a sharp selloff on Tuesday, with investor wealth eroding by nearly Rs 4 lakh crore as benchmark indices plunged sharply. The Sensex tanked around 900 points, while the Nifty 50 slipped below the crucial 25,600 level, reflecting heightened nervousness among investors.
The selloff was broad-based, affecting almost all sectors, including banking, IT, metals, realty, and FMCG stocks. Broader markets fared worse, with midcap and smallcap stocks witnessing steeper declines, indicating rising risk aversion.
Market participants said the sharp correction was triggered by a mix of global headwinds, profit booking after a strong rally, valuation worries, and uncertainty surrounding interest rates.
1. Weak Global Cues Weigh on Sentiment
Negative global cues played a major role in dragging Indian markets lower. Overnight weakness in US markets, driven by concerns that interest rates could remain higher for longer, dampened investor sentiment across Asia.
Rising US bond yields reduced the appeal of equities, prompting global investors to shift towards safer assets. Asian markets opened on a weak note, and Indian benchmarks followed suit, with selling pressure intensifying through the session.
Additionally, geopolitical uncertainties and concerns over slowing global growth further contributed to the risk-off mood.
2. Profit Booking After Recent Rally
Indian equity indices had witnessed a strong rally in recent weeks, pushing markets close to record highs. Analysts said the sharp fall was partly due to profit booking, as investors chose to lock in gains amid stretched valuations.
Several heavyweight stocks that had led the rally came under intense selling pressure. Once key technical support levels were breached, automated and derivative-led selling accelerated losses.
Market experts noted that such corrections are a natural part of market cycles and help cool overheated segments.
3. Valuation Concerns Across Segments
Valuation worries, especially in midcap and smallcap stocks, also weighed heavily on market sentiment. While earnings growth has remained steady, stock prices in many segments had surged sharply, leaving little margin for disappointment.
Even largecap stocks are now trading at premium valuations, prompting investors to become more selective. Any negative trigger, global or domestic, resulted in indiscriminate selling across sectors.
Analysts believe investors are increasingly shifting focus from momentum-driven trades to fundamentally strong stocks with reasonable valuations.
4. Interest Rate and Policy Uncertainty
Uncertainty over interest rates and upcoming policy cues added to market volatility. While domestic inflation remains relatively under control, global inflationary pressures continue to influence investor behaviour and capital flows.
Market participants are closely watching signals from central banks, including the Reserve Bank of India, for clarity on liquidity conditions and the future interest rate path.
Foreign institutional investors (FIIs) were seen trimming positions during the session, adding to selling pressure and amplifying the market decline.
Sectoral Impact
Banking and financial stocks were among the biggest losers, as concerns over margins and valuations resurfaced. IT stocks also declined amid weak global technology cues and uncertainty over overseas demand.
Metal stocks slipped on fears of slowing global demand, while FMCG and auto stocks also saw moderate selling due to profit booking. The breadth of the decline highlighted the intensity of the selloff.
Expert View and Outlook
Market experts believe the correction, though sharp, is healthy for the long-term structure of the market. Analysts caution that volatility may persist in the near term due to global uncertainties and key economic events.
Long-term investors are advised to remain calm and use such declines to gradually accumulate quality stocks, rather than panic selling. Stock-specific action is expected to dominate markets in the coming sessions.
Summary
Indian markets saw a Rs 4 lakh crore selloff as Sensex fell 900 points and Nifty slipped below 25,600, driven by weak global cues, profit booking, valuation concerns, and interest rate uncertainty.