Sensex falls 600 pts from day's high, Nifty near 22,450: Five key factors behind markets turning red

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Benchmark indices Sensex and Nifty fell significantly from day's high to trade in the red due to various reasons on October 12, including profit booking.

At 10:32 am, the Sensex was down 305.43 points or 0.42% at 72,166.90, and the Nifty was down 60.45 points or 0.27% at 22,460.00. About 2,344 shares advanced, 1,315 shares declined, and 198 shares were unchanged.

On the sectoral front, Nifty IT was among the top laggards, down 0.5%. While most of the index constituents were in the red, losses in Tech Mahindra weighed the most. Tech Mahindra lost over 4% and Mphasis more than 1%. Further, the downward move in the index came after the sectoral index closed 3% higher in the previous session. Tata Consultancy Services was flat in the first hour of trade.

Stocks in the financial sector struggled, with the Nifty Bank, Nifty Private Bank, and Nifty PSU Bank in the red. In the key banking index, HDFC Bank and AU Small Finance Bank were the only ones trading higher. Axis Bank, ICICI Bank, and State Bank of India were down around 1% each.

Among key movers was DMart operator Avenue Supermarts. The stock was down almost 4% in early trade after it reported a weak set of earnings for the September quarter. The company's profit and earnings before interest, tax, depreciation, and amortisation had also come in lower than estimates. Analysts were wary of the company's growth trajectory and several of them trimmed their earnings estimates. The stock was under pressure for the third consecutive session.

Poonawalla Fincorp gained over 6% after its consolidated net profit comfortably beat estimates and its assets under management rose over 55% on year. Its profit for the quarter ended September jumped over five times on year to Rs 375 crore. Shares of Canara Robeco Asset Management Co. rose over 2% after its profit and revenue for the quarter climbed 22% and 17%, respectively.

Key factors behind market decline

Profit booking

Profit booking was witnessed at higher levels after the markets rose for second straight day. Sensex fell 600 points from day's high while Nifty was trading near the psychologically important 22,450-mark.

In the previous session on 9th October 2026, Nifty closed at 22,520.45, gaining 288.65 points (+1.30%), after recovering from an intraday low of 22,294.75 on the back of buying at lower levels.

2. RBI measures

The Reserve Bank of India's (RBI) measures to curb rupee volatility could ease near-term depreciation pressure and help withdraw surplus liquidity from the banking system, according to research reports.

The measures, including a dedicated dollar window for oil marketing companies through designated banks and higher costs for certain foreign exchange hedging transactions, are expected to reduce dollar demand in the spot market and curb speculative positions against the rupee.

Bank Nifty was trading 0.5% lower on October 12.

The Reserve Bank of India will sell Rs 25,000 crore of bonds on Tuesday and require banks to maintain 99% of their daily cash reserve requirement from October 16, up from 90%.

The moves come days after the RBI raised its key policy rate for the first time in nearly four years and signalled more rate hikes.

At its policy meeting, the central bank announced no measures to drain liquidity, with Governor Sanjay Malhotra saying the surge in surplus cash would be temporary.

"Such flip-flops impact the credibility and often lead to a larger reaction in asset prices, as compared to what would have been," trader with a primary dealership told Reuters.

3. Technical reason

Nifty has to trade above 22,650 for any bullishness to return to the market, said analysts.

"The recent rebound after an eight-week losing streak is encouraging, but the modest weekly gains are not sufficient to confirm a sustained recovery. At this stage, the move appears to be an initial relief rally, and the market needs stronger price action and supportive macroeconomic developments to establish a durable uptrend.

"In the coming session only a move above 22,600 will open further pullback towards 22,800 and 23,100 levels. Failure to move above 22,600 will signal corrective consolidation in the range of 22,200-22,600," said Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.

"For the Nifty, 22,300 remains a crucial support level. As long as the index sustains above this level, a pullback towards 22,600 is possible, followed by 22,800–23,000. On the downside, a decisive break below 22,300 could intensify selling pressure and drag the index towards 22,150–21,750," said Shrikant Chouhan, Head Equity Research, Kotak Neo.

4. India VIX rises

India VIX rose 4% on Ocotber 12, suggesting short-term weakness in markets.

5. FII selling

On 9th October 2026, FIIs extended their selling streak to 11 consecutive sessions, recording net sales of Rs 3,568 crore. DIIs continued to support the market with net purchases of approximately Rs 4,743 crore, helping offset sustained foreign investor outflows.

Recovery may remain selective as persistent foreign outflows and domestic inflation data could weigh on sentiment, while investors will also assess the RBI's rupee-support measures and this week's corporate earnings, said Deepesh Sarawagi, technical research analyst at Choice Broking.