The Indian stock market remained muted on Wednesday morning, with the Sensex and Nifty trading nearly flat with minor losses, a day after the benchmark indices rallied more than 1.5%.

The Sensex was down around 10 points at 73,023, while the Nifty 50 fell 20 points to trade near 22,700, as seen at around 10:10 am on Wednesday. Broader markets remained mixed, with the Nifty Midcap 100 in the red and the Nifty Smallcap 100 in the green.

IT stocks extended sharp gains as the global AI-driven selloff continued to ease, with TCS , Infosys and HCL Tech shares jumping around 2% each to lead gains on the Sensex. Meanwhile, shares of Kotak Mahindra Bank , UltraTech Cement , HUL and BEL gained around 1% each. Shares of Bajaj Finance , Sun Pharma, Bajaj Finserv, L&T, Adani Ports , Eternal, M&M, Power Grid, ICICI Bank, Titan and SBI fell around 1% each.

The Nifty IT continued to lead market gains, jumping more than 1% despite the muted sentiment. The Nifty Pharma, meanwhile, dropped over 1% to lead losses. Overall market breadth remained positive, with 2,041 stocks advancing, 1,089 declining and 85 remaining unchanged on the NSE.

Nifty’s sharp 358-point rally yesterday, in an otherwise weak downtrending market, came as a bit of a surprise, said V K Vijayakumar, Chief Investment Strategist, Geojit Investments. Bears holding short positions must have rushed to cover them as the market suddenly turned, he noted.

The rally was triggered by Finance Minister Nirmala Sitharaman’s comment at the Bloomberg New Economy Forum that “the government would carefully review and discuss stakeholder feedback regarding the LTCGs tax and STT.” The market’s response indicated that investors were hopeful of potential changes to LTCG tax, the analyst noted.

RBI measures to restrict speculation in the currency market led to a 1.5% appreciation in the rupee over the last two trading days. This has helped reduce FII selling in the market significantly, Vijayakumar said. He, however, highlighted that the US 10-year Treasury yield hovering around 5.2% and Brent crude trading around $106 continue to be strong headwinds for the market.

“It would be difficult for the rally to sustain given these negatives. But segments like financials, telecom, metals and automobiles which are likely to report good Q2 numbers will remain resilient,” he added.

Yesterday’s sharp gains have renewed hopes of the Nifty moving towards 23,200, said Anand James, Chief Market Strategist, Geojit Investments. “That said, we are about to enter a congestion region that may challenge the upside momentum,” he noted.

“But, we see 22,550 as a downside marker and expect the index to test the 22,787-22,880 resistance zone,” he added.