The Indian stock market has experienced severe selling pressure, with Sensex touching its lowest level in 27 months and Nifty falling to a 6-month low. As per Goodreturns, Sensex traded around 72,500 levels at the time of writing, driven by stocks like Adani Ports, Kotak Mahindra Bank, Tata Steel, Indigo, and Tech Mahindra, though it hit an intraday low of 72,064 - the lowest since June 2024. The benchmark has nosedived by 12,619.68 points or 14.81% year-to-date, on track for its worst yearly performance in a decade. From its December 2025 all-time high of 86,159.02, Sensex has crashed by 14,095.02 points or 16.4%. Similarly, Nifty has crashed steeply by 3,430.35 points or 13.12% in 2026 and has nosedived by 14.4% or 3,803.55 points from its all-time high of 26,373.20.
Indian equities are facing growing technical weakness, with three-fourths of Nifty 500 stocks trading below their 100-day moving averages as of Thursday, according to CNBC TV18. The extended selloff is increasingly testing key technical levels, with a growing number of stocks falling below their medium- and long-term moving averages. India's market correction runs far deeper than headline Nifty decline suggests, with 50% of Nifty 500 stocks now more than 30% below their all-time highs. According to The Economic Times, 252 stocks have seen a drop of over 30%, with 102 stocks plummeting more than 50% from their peaks. The damage is severe at the lower end, where 167 stocks, or 33.4%, are down more than 40%, while nearly nine in ten Nifty 500 stocks are at least 10% below their peaks. 69.4% have declined more than 20%, with 449 stocks, or 89.8%, more than 10% below their all-time highs. Latest data shows that Nifty 500 stocks have plummeted up to 70% from their 52-week highs, with 270 stocks declining more than 20% and 426 dropping more than 10% from their peak levels.
Foreign institutional investors have withdrawn $56 billion from Indian equities over the past two calendar years, effectively neutralizing their cumulative inflows since CY2019, according to Motilal Oswal Financial Services (MOFSL). As reported by MOFSL, FIIs have sold Indian equities worth $25.6 billion in CY2026 so far, with flows remaining extremely volatile. The selling pattern shows FIIs purchased shares in only three months out of nine - February ($1.7 billion), July ($2.5 billion), and August ($2.4 billion). In CY2025 and CY2024, FIIs sold Indian equities worth $18.8 billion and $0.8 billion respectively, bringing total outflows to $45.2 billion over the three-year period. MOFSL data shows that FIIs had been net buyers worth $45.8 billion over the five years from CY2019 to CY2023, with purchases totaling $4.2 billion in CY2019, $23.4 billion in CY2020, $3.8 billion in CY2021, $21.4 billion in CY2023, and $17 billion in CY2022. Between October 2016 and September 2024, cumulative FII inflows stood at about $55 billion, making the total outflows between October 2016 and September 2026 approximately negative $0.6 billion.
The correction affects all major sectors, with over 25 Nifty 50 stocks now trading over 20% below their recent highs amid rising crude oil prices and economic challenges. As per LiveMint, Infosys topped the chart as the tech major dropped 40% from its 52-week high of ₹1,728, marking one of the biggest reversals in recent times. ITC crashed by a similar 40% from its October 2025 high of ₹426.40, while Hindustan Unilever was down 31.16% from its recent peak. TCS and HCL Technologies plunged 38% and 30% respectively from their recent peaks, with other Tata Group stocks including Trent, Tata Consumer Products, and Tata Steel down 24.11%, 25.39%, and 20.68% respectively. Maruti Suzuki India saw shares slide 34.45%, while Mahindra & Mahindra and Bajaj Auto fell 25.52% and 20% respectively. Jio Financial Services and HDFC Life Insurance were among other blue-chip majors that fell 33% and 32.25% respectively, with BSE trading 31.50% lower than the ₹4,446.80 level it touched in May. Reliance Industries was also trading 27.55% lower than ₹1,611.80 it had touched earlier this year. Latest data shows that stocks such as Vedanta, HEG Advanced Materials, Tata Motors Passenger Vehicles, Reliance Power, and KPIT Technologies are down between 62-68% from their 52-week highs, while KEC International, Inox Wind, Kaynes Technology India, and Avanti Feeds, Brainbees Solutions, RVNL, and PB Fintech are among the 16 stocks in the Nifty 500 index down more than 50% from their one-year highs.
In stark contrast to FII behavior, domestic institutional investors have demonstrated strong market support, pumping a record $177 billion into Indian equities over the past 24 months, which represents 23% higher than their cumulative inflows during the preceding eight years, as reported by MOFSL. The report noted that strong retail participation, supported by steadily rising monthly SIP contributions, provided a cushion against the relentless FII selling. Chokkalingam added that unless oil prices fall substantially below $100 per barrel, FIIs may remain net sellers of Indian equities, suggesting benchmark indices are likely to remain weak. Over the full 10-year period from October 2016 to September 2026, cumulative DII flows stood at around $320 billion. Annual DII investments reached $62.9 billion in CY2024 and climbed to $90.1 billion in CY2025, with domestic institutional flows standing at $64.6 billion in CY2026 year-to-date. Monthly SIP flows have risen steadily and reached around ₹32,000 crore (₹320 billion), providing crucial market liquidity amid persistent foreign selling.
Market experts suggest a selective approach to blue-chip stocks amid the current divergence. Sunny Agrawal from SBI Securities expects the stock-specific approach to remain relevant, with outperformance likely across all market cap cohorts with different percentage returns. He noted that the street has rotated from top-down to bottom-up stock-specific approach, leading to outperformance of select handful names. Aruna Giri from The Economic Times suggests small-caps may have a higher valuation floor if domestic flows continue as a structural anchor, though there will remain huge divergence between winners and losers at the stock-specific level. The medium-term outlook remains bullish with robust macro and earnings environment, expecting small- and midcaps to continue delivering better earnings growth than largecaps. However, experts caution that until foreign selling slows, rallies should be treated as opportunities to reduce risk rather than confirmation of a bottom. With market sentiment remaining fragile, analysts believe the next leg of the market will depend on a mix of domestic policy decisions, global economic data, corporate earnings, and geopolitical developments, with long-term investors advised to accumulate quality stocks with solid fundamentals.
