Sensex, Nifty drop for third session; Midcap rout deepens ahead of Fed meet

The share market fell for a third straight session on Wednesday, with benchmarks retreating sharply from opening levels as weakness in financials, retail counters and broader markets weighed on sentiment.

The Nifty 50 slipped below the 25,800 mark, ending 82 points lower at 25,758, while the Sensex dropped 275 points to 84,391. Market breadth remained weak, with the NSE advance-decline ratio at 2:3, signalling broad-based selling pressure.

Midcaps saw deeper cuts, with the Nifty Midcap index sliding 668 points to 59,007, while the Nifty Bank lost 262 points to 58,960 as financial stocks weakened.

Analysts said global cues continued to dominate sentiment. Vinod Nair, head of research at Geojit Financial Services, said volatility in global equities intensified as rising Japanese bond yields and signals of potential tightening by the Bank of Japan were driving risk-off moves across emerging markets.

He added that while a 25-basis-point cut by the US Federal Reserve is widely expected, mixed economic data and divisions within the Fed may cloud the outlook for further easing in 2026. The Fed is expected to scheduled to announce its interest rate decision tonight.

Electronics manufacturing stocks fell sharply-Kaynes Technology, Dixon Technologies, Amber Enterprises and PG Electroplast declined up to 10%-while midcap IT names softened ahead of the Fed policy decision, led by a 4% fall in Persistent Systems.

Airline stocks were also under pressure after the aviation regulator ordered carriers to trim their winter schedules by 10%, sending InterGlobe Aviation (IndiGo) down more than 3%.

Metals outperformed on expectations of US rate cuts, with Vedanta and Hindalco rising around 1%. Hindustan Zinc gained over 4% as global silver prices hit fresh record highs.

Capital-market intermediaries extended losses for a second session, with BSE, Angel One and Groww among the top laggards. AU Small Finance Bank rose more than 2% after the Finance Ministry cleared a hike in its FDI limit to 74%.

New listings-Meesho, Aequs and Vidya Wires-closed their debut sessions with gains despite the broader market drag.

According to Nair, Indian markets are also feeling the impact of persistent foreign fund outflows, a weak rupee and uncertainty around ongoing US-India trade discussions, with near-term direction likely dependent on central bank guidance and clarity on trade talks.