While Bank Nifty fell 1 percent today, the weakness in financial stocks dragged benchmark indices Sensex and Nifty lower. Analysts said the banking index is witnessing some consolidation after Tuesday’s rebound.

Banking stocks came under selling pressure on Wednesday morning, with the Bank Nifty falling 1 percent, as declines in heavyweights such as Axis Bank, ICICI Bank and HDFC Bank weighed on benchmark Nifty 50 index.

At 10:40 am, the Nifty Bank index was down about 1 percent at 56,383. The weakness in financial stocks dragged the benchmarks lower, with the Sensex declining 640 points or 0.8 percent to 77,563, while the Nifty slipped 176 points to 24,086.

Among the biggest laggards in the banking pack, Axis Bank stock fell more than 2 percent, emerging as the top loser on the Nifty. Other major private lenders also traded lower. HDFC Bank declined around 1.3 percent, while ICICI Bank slipped about 1.3 percent. All three stocks were among the top losers on the Nifty 50.

Kotak Mahindra Bank fell over 1 percent, while Union Bank also declined more than 1 percent during morning trade. Several other lenders traded modestly lower, including Yes Bank, IndusInd Bank, Federal Bank, and State Bank of India, which slipped between 0.4 percent and 0.7 percent. Public sector lenders such as Bank of Baroda, Punjab National Bank, and Canara Bank also edged lower, though losses were relatively limited.

Only a couple of stocks in the index managed to trade in positive territory. AU Small Finance Bank rose about 0.5 percent, while IDFC First Bank was marginally higher.

The weakness in banking shares also reflected in sectoral indices. The Nifty Private Bank index declined about 1.35 percent, while the Nifty PSU Bank index fell around 0.4 percent.

Analysts said the banking index is witnessing some consolidation after Tuesday’s rebound.

According to Aakash Shah, Technical Research Analyst at Choice Equity Broking, the Bank Nifty had shown relative strength in the previous session, closing near 56,950, with immediate support placed around 56,600-56,700 and resistance seen near 57,200-57,300.

A sustained breakout above this resistance band could strengthen sentiment in banking stocks, which remain crucial drivers of the broader market, he added.

Institutional flows continue to remain a key factor influencing market direction. Recent data shows foreign institutional investors (FIIs) remained net sellers to the tune of about Rs 4,673 crore, while domestic institutional investors (DIIs) provided support with net buying of around Rs 6,333 crore, helping cushion downside risks.

Market participants are also closely monitoring global developments as geopolitical tensions in the Middle East continue to influence investor sentiment through volatility in energy markets and potential disruptions to global shipping routes.

Ponmudi R, CEO of Enrich Money, said the ongoing crisis in the region has raised concerns about disruptions to crude oil supply chains, particularly around the Strait of Hormuz, a key maritime corridor that carries nearly 20 percent of global oil trade.

Since India imports around 85 percent of its crude oil requirements, any disruption to global energy supply routes could lead to volatility in oil prices and inflation expectations, which in turn may influence equity market sentiment.