Indian Stocks Fall Sharply Amid Global Concerns and Domestic Caution

The Indian stock market experienced a significant downturn on Thursday, as the Sensex touched a new 52-week low while the Nifty slipped below important technical support levels. This marked the fourth straight trading session of declines, largely influenced by heavy foreign institutional investor (FII) selling, rising government bond yields, and other global and domestic factors unsettling market participants.

During the day, both the Sensex and Nifty plunged by more than 1.5 percent, before recovering slightly in the late afternoon. The Sensex concluded the session down approximately 571 points at 71,910, while the Nifty 50 closed nearly 199 points lower at 22,422. This downturn erased about Rs 5 lakh crore from the total market capitalization of companies listed on the Bombay Stock Exchange (BSE), which now stands below Rs 467 lakh crore.

Market experts attribute the sharp selloff to external pressures. Bond yields in India have climbed to multi-year highs, and crude oil prices remain elevated, both of which have raised concerns about the economic outlook for the fiscal years 2026 and 2027. Additionally, investors are adopting a cautious stance ahead of upcoming corporate earnings for the second quarter and the Reserve Bank of India's (RBI) monetary policy announcement next week.

Vinod Nair, Head of Research at Geojit Investments, commented, "The market decline is largely influenced by global factors such as rising bond yields and sustained high crude oil prices, which impact growth expectations. Domestically, investors await Q2 earnings that are anticipated to be weaker than Q1, which had benefited from a lagged effect on operating costs. The RBI’s forthcoming policy could signal a change in approach due to global inflationary pressures and the need to support the Indian rupee." He added, "India’s economy remains resilient and is well-positioned to handle these challenges. Long-term investors might consider using the current weakness to increase holdings gradually, while short-term traders may prefer to wait for more definitive signals from international bodies and government actions to stabilize global financial markets."

In international markets, European stocks rebounded on Friday after a bond-related selloff earlier in the week. The pan-European STOXX 600 index rose 0.8 percent following a dip to a three-month low. This recovery was supported by easing oil prices and weaker-than-expected U.S. employment data, which lowered expectations for imminent interest rate hikes by the U.S. Federal Reserve.

On the domestic front, trading activity was concentrated in several key stocks. Kotak Mahindra Bank led in turnover with Rs 3,271 crore, followed by HDFC Bank at Rs 2,679 crore and Reliance Industries at Rs 1,967 crore. Other actively traded stocks included BSE, ICICI Bank, Tata Consumer Products (TARIL), and Mahindra & Mahindra (M&M).

In terms of volume, Vodafone Idea saw the highest number of shares traded at 61 crore, with Yes Bank and Kotak Mahindra Bank also among the most actively exchanged.

Some stocks attracted buying interest despite the broader market weakness. Schneider Electric India, Inox India, IDBI Bank, Welspun India, Sterlite Technologies, HFCL, and Mphasis showed notable demand from investors. Welspun India, Sterlite Tech, Syrma SGS Technologies, and Cupid reached their 52-week highs during the session.

Conversely, several stocks faced selling pressure, including Policy Bazaar, Bajaj Auto, Chennai Petro, Ircon International, KSB, Sansera Engineering, and Lloyds Metals. Among these, Policy Bazaar, Maruti Suzuki, Swiggy, UPL, REC, Bharti Hexacom, and Ambuja Cements recorded 52-week lows.

The overall market sentiment leaned bearish, with 2,572 stocks declining and 1,022 advancing on the National Stock Exchange (NSE) out of 3,707 stocks traded on Thursday, October 1.

Investors and traders will be closely monitoring upcoming quarterly earnings and the RBI's policy decision for further guidance. The interplay between global factors such as bond yields and crude oil prices, along with domestic economic data, is likely to continue shaping market trends in the near term.

Disclaimer: This article was authored by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or Investment Adviser. Neither the author nor their relatives hold financial interests in the companies mentioned as of the publication date. The views expressed originate from SEBI-registered analysts or brokerage firms and have been referenced with proper attribution. Readers should consult original research reports and make investment decisions based on their own evaluation.