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Sensex Sheds 633 Points as Oil, Yields and FII Exit Bite

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Indian benchmarks fell over 0.8% on Tuesday as Brent crossed $107, the rupee hit a two-month low past 96, and foreign investors kept selling.

India's headline share indices fell for a second straight day on Tuesday, sliding more than 0.8% as costlier crude, climbing bond yields and persistent foreign selling kept buyers on the sidelines. The drop followed a steep sell-off on Monday.

By about 10:25 AM, the Nifty50 stood at 22,586.60, lower by 194 points or 0.85%. The BSE Sensex traded at 72,138.99, down 633 points or 0.87%. Within minutes of the opening bell, close to Rs 4 lakh crore was wiped from the combined value of BSE-listed firms, pulling the total market capitalisation down to Rs 474 lakh crore.

Bajaj Finance ranked among the heaviest drags on the Sensex, shedding roughly 2%. The weakness reached beyond large caps, with both the Nifty Midcap 100 and the Nifty Smallcap 100 easing about 0.8% each.

The pullback mirrored a grim mood overseas. On Wall Street, the previous session closed deep in the red: the Nasdaq gave up more than 0.9% and the S&P 500 lost around 0.8%. Asian trading offered no relief, as Japan's Nikkei slipped over 1% and Hong Kong's Hang Seng, South Korea's Kospi and other regional gauges each shed close to 1%.

Crude and the Middle East keep investors on edge

Events in the Middle East remained the dominant worry. US President Donald Trump rejected claims that he had dangled sanctions relief and access to frozen Iranian assets before Tehran in exchange for steps on its nuclear programme. On Monday, officials from both Washington and Iran held separate rounds of talks through mediators, part of a renewed push to end a conflict now in its seventh month.

Energy prices tracked the tension higher. Brent crude futures pushed above $107 a barrel, while WTI futures crossed $94. The advance is a particular problem for India, a large net importer of energy, because pricier oil widens the import bill and strains the currency.

Rupee slips past 96 as yields climb

The rupee bore the brunt of that pressure, sinking beyond the 96-per-dollar level to a two-month low of 96.1450. Traders linked the weakness directly to the sustained rise in oil prices and the risk it poses to the economy.

Government bond yields, meanwhile, extended their climb to fresh multi-year highs, an added weight on stocks. When fixed-income returns rise, debt becomes a more attractive parking spot for money, drawing funds away from equities.

Foreign investors keep pulling out

Overseas funds stayed on the sell side. According to provisional NSE figures, foreign institutional investors offloaded Indian shares worth more than Rs 5,353 crore on Monday. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that foreign portfolio flows had turned negative at the start of the month after two straight months of inflows in July and August.

That reversal has been sustained. Vijayakumar said total equity outflows through the exchanges had reached Rs 25,682 crore so far this month through the previous week. Foreign investors have ended up as net sellers in 15 of the 19 sessions traded this month.

Tuesday's session carried an extra source of turbulence: it marked the monthly expiry of Nifty futures and options contracts, a day that routinely brings sharper swings.

Attention now turns to the Reserve Bank of India, whose Monetary Policy Committee meets next week from October 5 to October 7. Markets are positioning for an interest rate increase, in step with a wider global move toward tighter policy. The expectation comes on the heels of the US Federal Reserve's rate hike earlier this month, its first since 2023.

Sensex crash, Nifty50, Brent crude oil, rupee two-month low, FII outflows, RBI MPC meeting, bond yields, Dalal Street

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