MUMBAI: India’s equity market fell sharply on Tuesday as a combination of headwinds -- rising crude oil prices, higher bond yields, a falling rupee, and expectations of a repo rate hike -- jolted investors' sentiment.
In a highly volatile session, NSE Nifty reversed sharply from the day’s high of 23,592, falling more than 550 points intraday and closing below the 23,150 level.
The Nifty settled 279.50 points, or 1.19% lower, at 23,118.60, its lowest level since 6 April 2026. The BSE Sensex crashed 777.94 points, or 1.04%, to close at 74,003.82 on Tuesday.
Broader markets underperformed significantly, with the Nifty Midcap 100 and Nifty Smallcap 100 indices declining 2.12% and 2.43%, respectively.
Tuesday’s rout dragged the overall market capitalisation of the firms listed on the BSE to Rs 473.62 lakh crore from Rs 483.10 lakh crore in the previous session (Friday, 11 September), making investors poorer by around Rs 9.50 lakh crore in a single session.
"Domestic markets remained under pressure, extending their recent correction as elevated crude oil prices and rising global bond yields weighed on sentiment. Investors stayed cautious ahead of key central bank meetings this week, with growing expectations of further policy tightening by major economies,” said Vinod Nair, Head of Research, Geojit Investments.
Brent crude rose 2.3% to around USD 108/bbl as tension between the US and Iran remains high. For an oil-importing economy like India, sustained crude at these levels can increase inflationary pressures, widen the import bill, put pressure on the rupee and squeeze corporate margins.
The rise in inflation and crude prices also pushed the 10-year G-sec yield up 7bps to 7.09%, a four-month high. The US Treasury yields are also near multi-year highs and continue to dampen emerging market sentiment amid persistent foreign outflows.
The Indian rupee also fell sharply on Tuesday, extending its losing streak for a fifth consecutive session, pressured by rising global bond yields and higher crude oil prices amid ongoing supply disruptions. The rupee closed at 95.96 against the US dollar, depreciating 40 paise.
Dragged by multiple headwinds, India’s equity market is showing almost no signs of a decisive breakout. The current selling pressure has also defied India’s strong Q1 GDP numbers, with the benchmark indices – BSE Sensex and NSE Nifty50 - falling about 5% in the past month, while the year-to-date slump is more than 10%.
Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services said that Indian equities are likely to remain weak amid elevated crude prices, renewed inflation concerns and uncertainty ahead of the US Federal Reserve’s policy decision.
He added that India’s retail inflation accelerating to a 20-month high of 4.82% in August raises concerns over the scope for further monetary easing and increasing expectations of a tighter RBI policy stance.
Among sectoral indices, Nifty Defence fell 6% on Tuesday, extending its recent correction amid profit-booking following a strong run-up; the index is up 18% in 2026.
In the Nifty50 pack, IT majors, including HCLTech, Infosys, and TCS, led the gainers among Nifty 50 constituents. In contrast, BEL, Shriram Finance, and Adani Enterprises faced the strongest selling pressure and emerged as the top laggards.
