Sensex, Nifty50 Extend Losses as Oil, Bond Yields and FII Selling Weigh on Dalal Street
Nifty50 slipped below 22,600 in early trade on Tuesday, a day after Monday’s sell-off. Crude above $107 a barrel, multi-year-high bond yields and heavy foreign selling are keeping investors cautious.
Indian equity benchmarks extended their decline on Tuesday, a day after a sharp sell-off on Monday. Higher crude oil prices, rising bond yields and a string of other concerns kept investors on the back foot.
Market snapshot at 10:25 AM
- Nifty50: 22,586.60, down 194 points or 0.85%
- BSE Sensex: 72,138.99, down 633 points or 0.87%
- Nifty Midcap 100 and Nifty Smallcap 100: both down about 0.8%
- Market capitalisation: nearly Rs 4 lakh crore wiped out within minutes of the open, taking the combined value of BSE-listed companies down to Rs 474 lakh crore
- Top Sensex loser: Bajaj Finance, down around 2%
Global cues were weak too
Dalal Street was tracking weakness across world markets. US stocks ended the previous session sharply lower, with the tech-heavy Nasdaq falling more than 0.9% and the S&P 500 down around 0.8%.
Asia followed. Japan’s Nikkei dropped more than 1%, while Hong Kong’s Hang Seng, South Korea’s Kospi and several other regional markets fell by nearly 1% each.
Why is the stock market falling today?
1. A US-Iran peace deal still looks distant
US President Donald Trump has denied reports that he offered Iran sanctions relief and access to frozen Iranian funds in return for concessions on its nuclear programme.
Meanwhile, US and Iranian officials held separate discussions with mediators on Monday. Both sides are trying to renew efforts to end the seven-month war, according to officials from both countries. Without a clear breakthrough, uncertainty stays high.
2. Crude oil prices are climbing
Developments in the oil-rich Middle East continue to unsettle investors. Brent crude futures rose above $107 a barrel, and WTI crude futures moved past $94. For India, a net energy importer, higher oil prices raise the import bill and weigh on the economy.
3. Bond yields are surging
Bond yields kept rising and touched fresh multi-year highs. Rising yields generally make debt more attractive to investors, which puts pressure on riskier assets such as equities.
4. The rupee hit a two-month low
The rupee weakened past the 96-per-dollar mark and fell to 96.1450 against the US dollar, a two-month low. Continued oil price gains have heightened worries about the impact on the economy.
5. FII outflows are intensifying
Foreign investors stayed net sellers on Monday, offloading Indian equities worth more than Rs 5,353 crore, according to provisional NSE data.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the shift in foreign portfolio investor (FPI) flows from positive to negative, after inflows in July and August, became visible at the start of this month. Total equity outflows through exchanges have reached Rs 25,682 crore this month through last week. FIIs have been net sellers in 15 of the 19 trading sessions so far this month.
6. Monthly F&O expiry adds volatility
Tuesday’s session coincides with the monthly expiry of Nifty’s futures and options contracts. Expiry sessions are generally linked with higher market volatility.
7. Investors are bracing for an RBI rate hike
The Reserve Bank of India’s Monetary Policy Committee (MPC) meets from October 5 to 7. The market is pricing in a rate hike as part of a broader global tightening cycle. This follows the US Federal Reserve’s rate increase earlier this month, its first hike since 2023.
What to watch next?
Three things will likely steer sentiment in the coming days. The first is any concrete progress in US-Iran talks. The second is the direction of crude oil and the rupee. The third is whether foreign investors keep selling ahead of the RBI’s policy decision.
This article is for information only and is not investment advice. Please consult a SEBI-registered adviser before making investment decisions.
Frequently Asked Questions
Why is the stock market falling today?
- Higher crude oil prices, rising bond yields, a weaker rupee, continued foreign investor selling, uncertainty over US-Iran talks and expectations of an RBI rate hike are all weighing on sentiment.
Where are Sensex and Nifty50 trading?
- At around 10:25 AM, Nifty50 was at 22,586.60, down 0.85%, and the Sensex was at 72,138.99, down 0.87%.
How much market value was wiped out?
- Nearly Rs 4 lakh crore was erased from the combined market capitalisation of BSE-listed companies within minutes of the open, taking it down to Rs 474 lakh crore.
When is the RBI’s next policy meeting?
- The MPC meets from October 5 to 7. The market is pricing in a rate hike.
