The Sensex fell 400 points and Nifty dropped below 22,500 on Thursday as investors reacted to the RBI’s calibrated tightening stance. Rising oil prices and continued FII selling kept the market under pressure. While IT stocks showed gains, many other sectors fell. Analysts expect this fragile trend to continue for now.

Indian equities remain under pressure as the RBI's calibrated tightening stance, continued FII selling and rising oil prices weigh on sentiment, while IT stocks outperform and analysts expect largecaps to face further pressure.

The Indian stock market remained under pressure on Thursday, with the Sensex and Nifty trading in the red as investors assessed the RBI's shift to a calibrated tightening stance, while continued FII selling and rising oil prices weighed on sentiment.

The Sensex fell around 400 points to trade near 72,240, while the Nifty 50 lost more than 130 points to trade below 22,500, as of 10:15 am on Thursday. Broader markets also remained under pressure, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling up to 0.8% each.

Among the sectors, Nifty Realty, Nifty Oil & Gas and Nifty Metal fell nearly 2%, while Nifty IT jumped around 2%. The overall market breadth remained negative, with NSE seeing 2,252 declines against 914 advances, while 90 stocks remained unchanged.

What can bring the bulls back to Dalal Street?The calibrated tightening stance of the RBI has implications for markets, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, highlighted. With two more rate hikes of 25 bps each likely in this rate-hiking cycle, there will be pressure on valuations rising from higher fixed income returns, he said, adding that investor preferences also might shift marginally towards interest-inelastic segments like pharmaceuticals.

"A distinct and strong trend in the market in recent months has been the increasing preference for growth stocks over value stocks. Growth stocks are being accumulated at high valuations while value stocks are languishing at fair valuations. Sustained selling in largecaps by the FIIs has contributed significantly to this trend. With the US 10-year bond yield hovering above 5.3%, FIIs will continue to sell on every rally. This will put the Nifty largecaps under pressure for some more time," he added.

A reversal in this trend will happen only when FIIs turn buyers, and there is no clarity on when this will happen, the analyst noted. "In brief, this frustrating period in the market might continue for some more time. Remaining invested in value stocks will be rewarded in the long run. Investors should also look at the good opportunities in fixed income in this rising rate environment," he further said.

Technical view on NiftyTechnically, the market's undertone remains deeply fragile while Nifty hovers below the 22,800 pivot, said Hemang Gor, Senior Research Analyst- Derivatives and Technical Research, Axis Direct. He sees the benchmark index's immediate support at 22,500, and a break exposes 22,300 and the 52-week low near 22,180.

Nifty's move above 22,800 could extend toward 23,000, though easing crude and yields are needed to sustain any recovery, he added.