Mumbai, October 1: Indian equity markets came under heavy selling pressure on Thursday, with the Sensex falling more than 1,000 points and the Nifty 50 slipping below 22,300 during the session. The sharp decline came amid sustained foreign investor selling, elevated US bond yields and pressure on the rupee. Reports put the erosion in BSE-listed companies’ market capitalisation at around ₹8–9 lakh crore during the sell-off.
Here are the five key factors behind the market decline:
1. Heavy FII Selling
Foreign institutional investors have remained major sellers of Indian equities. FIIs sold more than ₹10,000 crore of Indian shares on September 30 alone, taking their selling over the preceding two sessions above ₹20,000 crore. Persistent foreign outflows have weighed heavily on market sentiment.
2. Rising US Bond Yields
US Treasury yields have climbed sharply, making dollar-denominated fixed-income assets relatively more attractive and putting pressure on emerging-market equities. The US 10-year yield was reported around 5.3%, contributing to continued foreign selling from Indian markets.
3. Rupee Weakness
The Indian rupee remained under pressure against the US dollar, trading close to the ₹96-per-dollar level. A weaker rupee can add to concerns about imported inflation and foreign-investor returns, further affecting market sentiment.
4. Global Market and Geopolitical Concerns
Global markets have remained volatile amid elevated borrowing costs and geopolitical uncertainty. Asian equities were largely subdued, while global bonds had a difficult September. These international cues added to the cautious mood in Indian equities.
5. Sector-Wide Selling and Valuation Concerns
The sell-off was broad-based, with several major sectors coming under pressure. Auto, metals, realty and consumer-related stocks recorded significant declines, while mid- and small-cap indices also fell sharply. Market volatility, measured by India VIX, increased during the sell-off.
The decline extends a difficult stretch for Indian equities, with foreign outflows and elevated global borrowing costs remaining important headwinds. At the same time, easing crude prices and softer-than-expected US inflation data have provided some counterweight to the broader weakness.
