Indian equities surrendered their early advance on Wednesday, as profit-taking in heavyweight stocks pulled the benchmarks lower. The BSE Sensex, which had jumped more than 600 points at the open, turned negative by early afternoon, trading 177.82 points, or 0.23%, lower at 76,846.72 by 1:00 p.m. The Nifty 50 hovered near the 24,000 level, down 9.45 points at 24,014.45, before recovering slightly to 24,077.80, up 45 points, by 1:23 p.m., according to NSE data.
The market's reversal came as a bout of profit-taking emerged after the initial surge, with investors awaiting clearer signals from ongoing U.S.-Iran talks that have kept crude oil prices volatile. Brent crude eased to around $108 a barrel on renewed hopes for a diplomatic resolution, but the uncertainty over how long this window of cheaper oil will last kept traders cautious.
Government Credit Guarantee Lifts Banks and Airlines
A major positive for the session was the Union Cabinet's approval of the Emergency Credit Line Guarantee Scheme 5.0 late Tuesday. The scheme, aimed at companies hit by the West Asia crisis, provides a government-backed guarantee for banks to extend fresh loans worth up to ₹2.55 lakh crore. Of this, ₹5,000 crore is specifically earmarked for airlines. The guarantee covers 100% of loans to MSMEs and 90% for non-MSMEs and airlines, effectively reducing the risk for lenders.
Information and Broadcasting Minister Ashwini Vaishnaw said the scheme is a response to the pressure on MSMEs and the aviation sector due to the conflict, and that the framework leaves very little probability for misuse. Under the plan, most borrowers can access extra credit up to 20% of their highest working-capital usage during the March quarter of FY26, with airlines potentially accessing more under certain conditions.
Bank stocks led the rally, with both private and state-owned lenders advancing on the news. Analysts at Nomura called the move a net positive for banks, saying it could boost loan growth and ease short-term asset-quality concerns. Airline stocks also soared: InterGlobe Aviation (IndiGo) climbed up to 3.58%, while SpiceJet surged to its 5% upper circuit.
Broader Market Shows Strength; FMCG, Energy Drag
Beneath the headline indices, the market was broadly firmer. By 12:47 p.m., advancing stocks outnumbered decliners 2,182 to 1,528, and broader indices gained about 1%. The Nifty Pharma index posted a 1.7% gain, while Nifty FMCG dropped 0.6% and Nifty Energy slipped 0.5%.
Earnings reports provided some support. Hero MotoCorp rose after beating profit estimates for the March quarter. Mahindra & Mahindra extended its rally following a profit beat. Coforge surged after reporting a quarterly profit jump of over 100%. However, Larsen & Toubro was a major drag, falling up to 3.8% after its quarterly profit slipped 3.1%. The company flagged that turmoil in the Middle East could weigh on revenue momentum, with HSBC Global Investment Research citing near-term growth and margin risks.
Foreign Selling Remains a Headwind
Foreign portfolio investors continued to be a major drag on the market. Overseas funds have pulled ₹1.98 lakh crore out of Indian stocks in the first four months of 2026, with an additional ₹5,052 crore offloaded so far in May, according to NSDL data. Sugandha Sachdeva of SS WealthStreet said that any turnaround depends on a calming of the West Asia situation, cooling oil prices, and a pick-up in global risk appetite.
Traders remained cautious, with the Nifty locked in a 23,750–24,250 range. Dhupesh Dhameja of SAMCO Securities noted that most participants are sticking to a sell-on-rise stance unless the upper barrier is broken. VK Vijayakumar of Geojit Investments said the market is tracking war updates and oil price jolts, and investors are likely to tread carefully on any new U.S.-Iran comments.
