CHENNAI: On Monday, the Indian stock market ended the session in a fairly gloomy mood. The benchmark BSE Sensex dropped by about 610 points (roughly 0.71 percent), settling at around 85,102.69. The broader NSE Nifty 50 also declined — it ended the day near 25,960.55, down approximately 226 points (about 0.86 percent).
The weakness was not limited to just the headline indices. Mid-cap and small-cap stocks bore the brunt of the sell-off: the mid-cap index fell over 1.7 percent, and the small-cap index dropped by more than 2.2 percent. Market breadth was weak — a large number of stocks closed lower, and selling pressure was visible across almost every sector. Realty, metal, energy, banking, telecom — few sectors were spared.
Why did markets slump today?
The mood turned cautious as investors moved to reduce risk ahead of an important upcoming global event: the policy meeting of the Federal Reserve (Fed) in the US. That meeting has the potential to influence global liquidity and capital flows, which is especially relevant for emerging markets like India. The uncertainty surrounding global monetary policy appears to have spooked investors, prompting them to scale back exposure.
At the same time, domestic factors added to the negative sentiment. Foreign institutional investors (FIIs) continued to pull money out of Indian equities, reflecting dampened confidence. The Indian rupee slipped against the dollar, weakening further — a depreciating currency tends to make foreign investors wary, especially in an environment already fraught with global uncertainty. In that context, many investors shifted away from riskier mid-cap and small-cap stocks toward safer or more stable assets, contributing to the broader sell-off.
This sell-off erased much of the optimism that had built up earlier, including gains from the recent rate cut by the Reserve Bank of India (RBI). That earlier move had buoyed sentiment — but with global concerns now dominating, the rally could not hold.
Looking ahead, the near-term outlook appears cautious. If global uncertainties remain unresolved and foreign fund outflows persist, markets may continue to see volatility. For now, indices may hover in a narrow, uncertain range unless there is a fresh domestic catalyst — for instance, improved macroeconomic signals, stabilisation of currency, or renewed investor confidence in global risk assets.
For investors, this could be a moment to stay selective and avoid chasing momentum. Broad-based speculation — especially in volatile small- or mid-cap stocks — seems risky in the current atmosphere. Instead, focusing on companies with solid fundamentals, stable earnings, or resilience against global headwinds might make more sense through this uncertain period.