Indian equity markets lost momentum in the second half of trading on May 6, with the BSE Sensex slipping nearly 500 points from the day’s high while the NSE Nifty dropped below the 24,150 mark. The reversal came after a strong opening session that was initially supported by easing crude oil prices, positive Asian market trends and optimism around improving geopolitical conditions globally.

The sudden shift in sentiment reflected how fragile the current market structure remains, especially after the sharp volatility seen over recent sessions. Investors who had accumulated positions during the recent rebound appeared to use the morning rally as an opportunity to lock in gains, leading to broad-based selling pressure across frontline indices.

Among the biggest triggers for the decline was weakness in heavyweight engineering major Larsen & Toubro after its March-quarter earnings disappointed the Street. The company reported a decline in consolidated net profit for the quarter, which weighed heavily on industrial and infrastructure stocks given L&T’s position as a proxy for India’s capex cycle.

The reaction to L&T’s earnings also reflected a broader market concern: investors are increasingly unwilling to overlook margin pressure and execution risks even in companies linked to India’s long-term infrastructure growth story. While several brokerages maintained constructive long-term views on the company, the immediate market reaction suggested that elevated expectations had already been priced into the stock.

Foreign institutional investor activity added another layer of pressure. Persistent FII selling has remained a major overhang for Indian equities in recent weeks, especially amid uncertainty surrounding global interest rates, geopolitical tensions and currency volatility. The rupee’s weakness against the US dollar has further complicated the outlook for overseas investors.