NEW DELHI: Dalal Street could be staring at its longest losing streak in nearly 25 years, with investors losing Rs 6 lakh crore. Benchmark indices came under heavy selling pressure on Thursday, with BSE Sensex and NSE Nifty50 falling more than 1% as persistent foreign investor outflows, rising US bond yields and pressure on rupee weighed down sentiments.BSE Sensex plunged more than 1,000 points to fall below 71,600, while NSE Nifty50 dropped over 300 points to slip below 22,300. However, the indices managed to limit their gains later in the trade. This brutal selloff the dragged total market capitalisation of companies listed on the BSE to Rs 466 lakh crore.With markets set to remain closed on Friday, investors turned cautious ahead of the extended break. Here are the key factors behind Thursday’s selloff on Dalal Street:
FII selling intensifies
Foreign investors remained a major source of pressure on Indian equities, turning net sellers across all reported equity and debt segments in September for the first time in two years. They sold Indian equities worth $1.06 billion on Wednesday, while exchange data showed FII selling of Rs 10,148.41 crore on the same day.Their selling over the previous five sessions stood at about $3.6 billion, taking their year-to-date selling to a record $27.8 billion.“The sustained FII selling became intense during the last two trading days when the FIIs sold equity for a total of Rs 20,128 crore. With the US 10-year bond yield rising further to 5.3 per cent, FIIs may continue to sell. An apparent contradiction in the FII activity is that even while selling through the exchanges, they have been consistently investing through the primary market and also buying expensive mid and smallcaps,” V K Vijayakumar, chief investment strategist, Geojit Investments Limited, said.FPIs had been net buyers in equities in July and August, with purchases of Rs 20,200 crore and Rs 29,631 crore, respectively. However, they were net sellers of Rs 35,861 crore in stocks till September 29. After another Rs 10,148 crore of selling on September 30, the month’s total stock selling stood at about Rs 46,000 crore, according to NSDL and BSE data.For the current year, FPI net selling in equities has reached Rs 2.6 lakh crore, compared with Rs 1.7 lakh crore in the previous year. The 2026 outflow is now the highest-ever annual net selling figure, NSDL data showed.
US bond yields hit multi-year highs
Rising US treasury yields added to the pressure on equities. The benchmark 10-year Treasury yield climbed as high as 5.31%, its highest level since 2007. It rose more than 87 basis points during the September quarter, marking its biggest quarterly increase since 1994, according to LSEG data cited by Reuters.The 30-year Treasury yield also moved above 5.65%, reaching its highest level since 2002.Higher bond yields can make debt markets more attractive to investors, putting pressure on riskier equity markets. Bond yields move inversely to bond prices, so the sharp rise in yields reflected an intense selloff in bonds.“The domestic market remains under pressure after extending its decline, with September marking the Nifty’s steepest monthly fall since March. Foreign selling and elevated global borrowing costs continue to weigh on sentiment, although the easing in crude prices and softer US inflation provide some counterweight,” Hariselvan Radhakrishnan, founder & CEO of HST Wealth, a research analyst firm, said.
Rupee remains under pressure
Rupee fell 0.16% to 95.9850 per dollar as the dollar index rose to a more than three-month high amid higher US Treasury yields. Losses were limited as state-run banks sold dollars, likely on behalf of the RBI, Reuters reported.Anil Bhansali, head of advisory at Finrex Treasury Advisors, said that the 96 against the greenback is a crucial level.“The 96 level remains an important psychological and technical area, with the rupee showing some resilience each time it approaches that level, thanks largely due to the Reserve Bank of India.”
Crude close to $100
In afternoon trade, Brent crude inched 1.87% high to trade around $99.86 per barrel, while WTI crude gained 2.01% to $92.24 per barrel. Brent crude futures have continued to remain near $97 a barrel after Tehran said it had received Washington’s response to its latest ceasefire proposal.Crude oil prices remain a critical bellwether for the equity markets. Because India imports over 85% of its crude oil requirements, fluctuations in global energy prices directly ripple through the country’s macroeconomic fundamentals.
Auto and infra stocks drag D-Street
The selloff was broad-based, with several heavyweight stocks coming under pressure. Among the 30 Sensex companies, Mahindra & Mahindra, Maruti, UltraTech Cement, Bharat Electronics, Eternal and Asian Paints were among the major laggards.Maruti fell 4.93%, M&M 4.24%, Tata Steel 4.20%, Adani Ports 3.47%, ITC 3.20%, UltraTech Cement 3.01%, Power Grid 2.76% and Eternal 2.75%.Other major losers included HUL, BEL, Trent, NTPC, Larsen & Toubro, Bajaj Finance, Reliance Industries, Titan, IndiGo and Bharti Airtel.In contrast, Infosys, HDFC Bank, Kotak Mahindra Bank and HCL Tech were among the stocks showing gains during the session. Axis Bank, TCS and ICICI Bank were also among the stocks in the green or near-flat zone.US markets ended mostly lower on Wednesday, adding to the cautious mood in domestic equities.
Nifty’s key psychological levels breached
The market decline was also exacerbated after the benchmark indices broke through key technical levels.The Nifty had closed at 22,620 on Wednesday. Hemang Gor, senior research analyst of derivatives and technical research, as cited by ET, identified 22,500 as the index’s first support level and warned that a break below it could expose the benchmark to a fall towards 22,400.The Nifty subsequently moved below the second support level as well.Axis Securities had also identified 22,500 as the first support level and said a break below it could drag the index towards 22,300. “Conversely, a sustained move above 22,800 could strengthen the upward momentum, opening the door for a move toward the 23,000–23,100 zone,” said Axis Securities.Meanwhile, “With markets to be closed tomorrow, the session is seeing cautious positioning ahead of the extended break,” said Hariselvan Radhakrishnan, founder and CEO of HST Wealth.
