The Indian stock market fell sharply on Monday as Sensex dropped over 500 points to below 71,900 and Nifty fell below 22,400. Persistent FII selling and rising bond yields shook investor confidence. Tech Mahindra shares fell nearly 4%, leading the losses, while broader market segments showed resilience despite the overall decline.
Synopsis
The Indian stock market saw a downturn as both Sensex and Nifty lost previously gained ground. Market confidence was shaken by ongoing FII selling and increasing bond yields. Tech Mahindra experienced the most significant drop, with shares down nearly 4%. Conversely, the broader market segments like Nifty Midcap 100 and Nifty Smallcap 100 performed well, showcasing resilience amidst the decline in major companies.
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After opening higher, the Indian stock market reversed course and fell sharply on Monday, with the Sensex tumbling over 900 points from the day’s high as concerns over persistent FII selling, rising bond yields and other headwinds overshadowed optimism.
Sensex dropped over 500 points to fall below 71,900 while Nifty 50 declined nearly 150 points to trade below the 22,400 level. This came while India VIX, which measures volatility in the market, jumped over 7% to cross 15. The Sensex had opened over 400 points higher before quickly reversing course and wiping out its opening gains.
Tech Mahindra shares dropped nearly 4% to lead losses on Sensex, while shares of ITC, SBI, Bharti Airtel, Hindustan Unilever, L&T, NTPC, ICICI Bank and Axis Bank fell up to 3%. Bucking the trend, M&M, BEL and Trent shares gained around 1% each. Broader markets however outperformed, with Nifty Midcap 100 and Nifty Smallcap 100 indices rising up to 1%.
Among the sectors, Nifty FMCG and Nifty PSU Bank indices dropped more than 1% each to lead losses, while Nifty Private Bank and Nifty IT slipped more than half a percent each. Nifty Auto meanwhile jumped over 1%. Despite benchmark indices trading in the red, the overall market breadth remained positive, with NSE seeing 1,884 advances against 1,474 declines, while 101 stocks remained unchanged.
Here are the key factors pushing market down today:
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1) Bond yields soar to multi-year highs
The global bond selloff continued to intensify, resulting in a sharp spike in bond yields that typically makes the comparatively lower-risk government debt contracts look more attractive in comparison to the equity markets. The 10-year US Treasury yield recorded its biggest quarterly increase of the 21st century in the three months ended September, Reuters reported. The yield on 10-year US Treasuries climbed above 5.3%, surpassing its 2007 peak and hitting its highest since early 2002. The 30-year yield has touched 5.6%, also not seen since 2002.
The India 10-year bond yield jumped to 7.37%, the highest in three years. This comes after the RBI announced measures to reduce surplus liquidity from the banking sector, announcing the lenders will have to maintain a minimum daily balance of 99% of the CRR requirement from the fortnight beginning October 16, up from 90% maintained so far.
2) Persistent FII selling
FII selloff has sharply intensified in October, with foreign investors net selling Indian equities worth Rs 45,125 crore in just six sessions in October so far, nearly the same as the total Rs 45,536 crore outflows recorded in the entire month of September. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that the rapid acceleration in FII outflows in October so far has taken the total FPI equity selling in 2026 to a whopping Rs 3,60,952 crore. “This massive FPI selling is the primary reason why the Indian market is underperforming this year with negative 13.87% Nifty returns so far in 2026,” he said.
3) Middle East conflict escalates
Iran has rejected the latest US response to its proposal to end the war, calling it “insufficient" while warning of attacks on regional data centers and cables if fighting intensifies again. The head of Iran’s Supreme National Security Council Mohsen Rezaei added that Washington needs to clarify the issues that remain unclear to Tehran.
Meanwhile, Yemen’s Houthis claimed responsibility for a strike on Riyadh’s international airport on Saturday that killed 13 people and wounded more than 300. Saudi authorities also reported injuries in another attack on the airport on Sunday. Trump said on Saturday that the United States was considering joining Saudi strikes against the Houthis, as the conflict spreads from the wider war with Iran launched by the US and Israel in February.
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(You can now subscribe to our ETMarkets WhatsApp channel)
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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