Stock Market Sectoral Analysis, May 29, 2026: IT Stocks Rally Fizzles Out; Defence, Financials Under Stress as Ola Electric Mobility Bucks the Trend

Mumbai, May 29: Indian equity benchmarks ended sharply lower on Friday as selling in heavyweight financial, defence and auto stocks overshadowed gains in select IT counters. The Sensex tumbled more than 1,100 points, while the Nifty slipped below the 23,600 mark amid weak market breadth, foreign fund outflows and heightened volatility linked to the MSCI index rebalancing.

The market had opened higher after easing crude oil prices and optimism surrounding an extension of the U.S.-Iran ceasefire arrangement, but gains quickly fizzled out as investors turned cautious through the session.

IT Rallies but Fizzles Towards the End

The IT index gained 0.6% as the index rose then gave up gains towards the end. Wipro share price rose as much as 4% after the IT services company announced an expansion of its partnership with U.S.-based software firm ServiceNow to roll out agentic AI-driven workflows across key enterprise functions. The stock later trimmed some gains. 

IT stocks kept partying but the music went out at the end. Source: NSE

TCS share price, on the other hand, declined after reports that it had lost a major client mandate in Canada, something that the IT major denied. Infosys share price ended flat while HCL Technologies share price rose along with others who chose to march.

Overall, the IT pack provided limited support to the market as optimism around an artificial intelligence-linked deal supported buying interest in the sector.

Defence Down

Defence stocks witnessed sharp selling pressure after Bharat Dynamics share price plunged following disappointing quarterly earnings. The weak results from the missile manufacturer weighed on the broader defence pack, with stocks such as Bharat Electronics and Hindustan Aeronautics also witnessing pressure as investors turned wary of elevated valuations and execution-related concerns.

Financials Fail

Banking and financial stocks remained under stress amid persistent foreign institutional investor selling. Apart from HDFC Bank and ICICI Bank, names such as Axis Bank, Kotak Mahindra Bank and Bajaj Finance also traded weak, dragging the benchmark indices lower.

Nifty Financial Services index fell apart as heavyweights crashed all around. Source: NSE

Auto, Consumption Stocks See Stock-Specific Action

The auto sector witnessed mixed trends with Ashok Leyland share price falling after its March quarter earnings despite reporting profit growth. Investors remained cautious over margins as input costs soared on the Iran war.

Nifty Auto index kept bleeding as Ashok Leyland led the decline after results. Source: NSE 

Meanwhile, electric mobility-linked stocks bucked the broader weakness. Ola Electric Mobility extended its recovery rally as investors cheered improving operational metrics, lower cash burn and management commentary around demand recovery.

Consumer-facing stocks also saw divergent moves. Asian Paints share price initially rose nearly 2% after reporting better-than-expected quarterly earnings and strong margin expansion before turning flat as concerns around intensifying competition capped gains. PC Jeweller share price, on the other hand, surged after posting a sharp jump in quarterly profit and improved operational performance.

Telecom stocks remained in focus as Vodafone Idea reclaimed the title of the most traded stock by volume on the NSE, overtaking Jaiprakash Power Ventures after briefly losing the position in the previous session. Vodafone Idea shares slipped after the telecom operator entered the debate around net neutrality and premium internet services linked to 5G slicing.

FMCG stocks fell along with the broader markets.

MSCI rejig Amplifies Closing-Hour Swings

A major reason behind Friday’s sharp volatility was the latest MSCI index rebalancing, which came into effect at the close of trade and triggered heavy institutional activity across several stocks.

According to market estimates, the rejig could lead to passive foreign outflows of nearly $800 million to $1 billion from Indian equities. Stocks such as Federal Bank, MCX, NALCO and Indian Bank witnessed heightened activity after being added to the MSCI Standard Index.

On the other hand, Rail Vikas Nigam, Kalyan Jewellers, Jubilant FoodWorks and Hyundai Motor India saw volatile moves after being excluded from the index. Although India’s aggregate weight in the MSCI indices remained broadly unchanged, the reshuffle led to sharp price swings and elevated trading volumes toward the closing bell.

Source:

• NSE