Wiping out early gains, India’s equity market fell sharply on Monday as global and domestic macroeconomic concerns continued to weigh on sentiment. After Friday’s recovery, benchmark NSE Nifty50 opened 70 points higher on strong global cues and touched an intraday high of 22,651. However, selling pressure intensified and persisted throughout the session, pulling the index nearly 250 points lower from its high to close near the day’s low.
At close, the Nifty50 was down 157.10 points or 0.70% at 22,363.35 while the BSE Sensex declined 547.65 points or 0.76% to settle at 71,924.68.
Vinod Nair, Head of Research, Geojit Investments, said that Indian markets failed to hold on to early gains as sentiment weakened amid a rise in the 10-year bond yield to a three-year high and continued FII outflows driven by external uncertainties. Government bond yields opened sharply higher on Monday as the Reserve Bank of India’s (RBI) latest liquidity-draining measures added to selling pressure. The yield on the benchmark 6.94% government security maturing in 2036 rose to 7.3553% at the open, from 7.2994% at Friday’s close.
Foreign institutional investors (FIIs) have withdrawn Rs 44,166 crore from Indian equities through October 9, 2026, bringing the total outflows this year to more than Rs 3 lakh crore as elevated crude oil prices, a strong dollar index and higher US bond yields weigh on investor sentiment.
Meanwhile, the Indian rupee was the strongest performer among its Asian peers, appreciating 96 paise to close at 95.77. The strong performance came after the RBI’s targeted measures to curb speculation and contain volatility in the forex market.
“Although the rupee strengthened following the RBI’s recent measures to curb dollar demand, Brent crude remained elevated in the $102–105 a barrel range, limiting the relief on the inflation front. Elevated global bond yields, escalating geopolitical tensions and persistent foreign fund outflows continued to act as major headwinds,” said Ajit Mishra, SVP – research, Religare Broking.
Nair added that banking stocks led the decline after the RBI raised the daily CRR maintenance requirement to absorb surplus liquidity, while investors await domestic CPI inflation data for clues on the scope for further monetary tightening.
India's retail inflation rose to 5.54% in September, crossing the 5% mark for the first time in the new Consumer Price Index (CPI) series. The rise in inflation comes as the RBI in its latest MPC meet shifted its stance last week from ‘neutral’ to ‘calibrated tightening’, signalling room for further rate hikes as inflationary pressures build amid the West Asia crisis.
Nair said that the Middle East remains a key overhang, with continued Houthi attacks on Saudi and regional energy infrastructure keeping concerns over potential supply disruptions and elevated crude oil prices alive.