Indian equity benchmarks witnessed notable profit booking in afternoon trade on February 20 after a firm start earlier in the session. Both the Sensex and Nifty had gained close to 0.8% in morning trade but lost momentum as multiple macro and market-specific pressures converged through the day. By early afternoon, the Sensex had slipped roughly 400 points from its intraday high, while the Nifty hovered below the psychologically important 25,550 level, reflecting cautious investor positioning ahead of global uncertainties.

At 1:16 pm, the Sensex was trading at 82,736.29, up 238.15 points or 0.29%, after touching a high of 83,132.08. The Nifty stood at 25,548.35, up 94 points or 0.37%, down from the day’s peak of 25,663.55. Market breadth remained weak, with declining stocks marginally outnumbering advances, signalling that selling pressure was broad-based rather than confined to a few heavyweights.

One of the primary triggers was the escalation in geopolitical tensions involving the United States and Iran. US President Donald Trump warned Tehran to reach a nuclear agreement within 10 to 15 days or face severe consequences, prompting threats of retaliation against US bases in the region. Such developments raised concerns over stability in the Middle East, a region central to global oil supply. Brent crude prices climbed to about $71.87 per barrel, extending a three-day rally of more than 6%. For India, which imports the bulk of its crude oil requirements, higher oil prices directly translate into inflation risks, pressure on the current account, and potential strain on fiscal balances.

Institutional flows also added to the cautious tone. Data from February 19 showed both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) were net sellers, offloading equities worth ₹880 crore and ₹596 crore respectively. Simultaneous selling by both investor classes is relatively uncommon and often signals a broad reassessment of near-term risk. FIIs, in particular, remain sensitive to global macro developments, currency movements, and US interest rate expectations, making them quick to reduce exposure during uncertainty.

Currency weakness compounded the pressure. The rupee weakened to around 90.95 against the US dollar, slipping sharply from its previous close of 90.6675. A depreciating currency typically discourages foreign inflows and raises imported inflation, especially when accompanied by rising crude prices. Currency markets had been shut the previous day due to a local holiday, leading to pent-up adjustments once trading resumed.

Sectoral dynamics also played a decisive role, particularly the continued selloff in information technology stocks. IT shares declined for a third consecutive session, with major names such as Persistent Systems, Infosys, and Mphasis falling between roughly 1.2% and 2.6%. The sector remains highly sensitive to global growth expectations and currency volatility, as a significant portion of revenue comes from overseas markets. Weakness in IT stocks often exerts disproportionate pressure on benchmark indices due to their heavy weightings.

Market strategists noted that the surge in crude prices and geopolitical uncertainty have placed investors in a wait-and-watch mode. According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, fears around potential escalation in the Middle East have increased volatility, while the ongoing weakness in IT stocks is acting as an additional drag on sentiment.

Technical indicators also suggest caution. Analysts observed that the Nifty formed a strong bearish marubozu pattern on the daily chart, a sign of aggressive selling. Momentum indicators such as the Relative Strength Index have turned negative, reinforcing the view that near-term bias has weakened. Technical experts indicated that if the index fails to hold key support levels, a move toward the 25,000 zone cannot be ruled out, while resistance is likely around 25,800.

For Indian markets, the broader implication is that domestic fundamentals alone may not be sufficient to sustain rallies when global risk factors intensify. Rising oil prices threaten to reverse recent gains in macro stability, including controlled inflation and manageable current account deficits. At the same time, a weaker rupee and institutional outflows can tighten financial conditions.