The Nifty 50 fell 6.1 per cent in September, marking its worst monthly drop in eight years. Foreign investors pulled ₹25,662 crore from Indian equities, while domestic investors bought ₹52,617 crore. Ajit Mishra said, “Nifty has tested that mark after 6 years.” High crude prices and global rate hikes caused this.
Indian equities ended the first half of FY27 under pressure, with September emerging as the weakest month for the Nifty 50 since 2018 as elevated crude prices, higher global bond yields and sustained foreign selling weighed on sentiment.
The Nifty 50 closed September at 22,620.45, down 6.1 per cent during the month. For the first half, NSE 50 index gained 1.3 per cent.
FPIs turned to risk-averse mode in September, amid inflation worries as crude oil prices surged above $100/barrel that forced global central banks to hike interest rates.
The US Fed raised its key interest rate in September, followed by central banks in Europe, Japan and Australia. Analysts expect RBI will also hike the rate in the upcoming October 7 meet, as inflation rose.
FPIs withdrew ₹25,662 crore from Indian equities through the secondary market in September, ending a two-month buying streak. At the same time, they invested ₹8,551 crore through the primary market, indicating that foreign participation remained active in new issuances even as selling continued in listed equities.
DIIs support
Domestic institutional investors (DIIs), however, continued to absorb a substantial part of the foreign selling. DIIs invested ₹52,617 crore during September, providing a liquidity cushion as overseas investors reduced their exposure.
The divergence between FPI selling and DII buying was also visible through the latter part of the month, with foreign investors selling ₹9,980.22 crore on September 29 while DIIs bought ₹6,952.71 crore.
The market-capitalisation of NSE listed stocks was at ₹467 lakh crore as on September 2026, down from ₹469 lakh crore as on June 2026. But it rose nearly 14 per cent in the first half from ₹410 lakh crore in March 2026.
Meanwhile the September decline came after the market had recovered from the lows seen at the start of the financial year.
Ajit Mishra, SVP–Research, Religare Broking, said the Nifty had been undergoing a prolonged correction since its September 2024 peak, with the recent decline erasing gains made over the preceding months.
“The key supports, the technical levels, the long-term averages on the weekly charted 200 days of weekly exponential moving average. Nifty has tested that mark after 6 years,” he said.
The broader market also came under pressure during September, although mid- and small-cap stocks showed relative resilience in parts of the period. Mishra said the benchmark indices may not fully capture stock-specific opportunities, with earnings likely to drive performance across individual counters.
IT, infosys worst performers
None of the sectoral indices closed in the green in September. Nifty IT was the worst performer, tumbling nearly 12 per cent. Bajaj Finserv and Infosys were the worst performers by falling 14.3 and 12.3 per cent.
Brent’s decline provided more meaningful comfort than the earlier marginal pullbacks, but it was insufficient to trigger a broad market reversal, said Hariselvan Radhakrishnan, Founder & CEO of HST Wealth.
The US 10-year Treasury yield remained near 5.25 per cent after touching approximately 5.29 per cent, keeping global valuation pressure and the risk of further foreign outflows elevated. Unless yields cool alongside crude, India’s recovery may remain concentrated rather than broad-based, he added.
Eyes on Q2 results, FPI flows
Looking ahead, the September sell-off has shifted attention to corporate earnings, crude prices, foreign flows and monetary policy. Mishra said crude remains the key risk.
“In case if it sustains and holds above, let’s say, or may witness a fresh uptick towards $120 again, that would definitely trigger... next leg of down in the market.”
Nandish Shah, Deputy Vice President, HDFC Securities, said the Nifty is testing the 22,600 area, which coincides with its 200-week moving average.
“A decisive break above 23,000–23,100 is required to signal a meaningful recovery,” he said. 360 ONE Asset’s Mayur Patel also flagged the trajectory of crude, the US-Iran conflict, tariffs, RBI policy and festive-season demand as key factors for the market in the months ahead.