The Nifty 50 index closed at 22,716.20 on Tuesday, marking the weakest monthly expiry in six months amid surging bond yields and elevated crude oil prices. According to Zee News, this breakdown, coupled with rising volumes, has further weakened the short-term structure. The index is now staring at its worst calendar-year performance in 15 years, with the benchmark down nearly 13% so far in 2026. The lowest monthly expiry so far this year occurred on 30 March, when the Nifty 50 closed at 22,331.4, a month after the outbreak of the US-Iran conflict. However, markets recovered from that low to close at 24,334.55 at last month's expiry on 25 August. Recent selling pressure has intensified with the Nifty touching an intraday low of 21,064, taking its two-session decline to around 571 points, while the BSE Sensex plunged more than 1,800 points across the two sessions, touching an intraday low of 72,064.
Foreign Institutional Investors offloaded equities worth more than ₹10,000 crore in a single day, bringing the total FII selloff this week to a whopping ₹26,000 crore. According to The Economic Times, such massive FII selling has sharply dampened investor sentiment, with Bernstein noting that FIIs are unlikely to return in large numbers even after the AI trade peaks, adding that a structural revival would require India to create "new engines of competitiveness, innovation, and global relevance." The Sensex dropped over 800 points to fall below 71,700, while Nifty 50 dropped over 250 points to drop below 22,350, with the sharp selloff wiping off nearly ₹8 lakh crore from the total market capitalisation of all companies listed on BSE, dragging it down below ₹472 lakh crore. M&M, Maruti Suzuki, Tata Steel, Adani Ports, UltraTech Cements, ITC, HUL and BEL shares plunged 3-4% to lead losses on Sensex, while Trent, L&T, Power Grid, Bajaj Finance, Eternal and Titan shares dropped over 2% each. G Chokkalingam, Founder and Head of Research at Equinomics Research, said liquidity constraints are the "major reason" for the current weakness, with FPIs selling ₹10,148 crore on September 30, their biggest single-day outflow in nearly six months.
The 30-year Treasury yield climbed above 5.65%, reaching its highest level since 2002, adding to negative investor sentiment and exacerbating market volatility. According to The Economic Times, soaring bond yields typically make debt markets more attractive to investors, which in turn puts pressure on the riskier equity markets. Bond yields move inversely to bond prices, so the soaring yields reflect a sharp selloff in bonds. India VIX, which measures volatility in the market, spiked over 12% to 15.15 as the selloff intensified in the afternoon, indicating heightened fear among investors. The climb in bond yields added to negative investor sentiment, exacerbating market volatility and contributing to the broader market weakness. The US 10-year Treasury yield has moved to 5.33%, its highest level since 2002, adding another layer of pressure on global markets.
The Nifty 50 has plunged over 320 points from day's high, falling as much as 1.53% intraday to 22,290.55, while the Sensex meanwhile has fallen 1.40%, or over 1000 points intraday, to 71,513 as of 1:45 pm. According to NDTV Profit, barring IT, all sectoral indices are in the red, with Auto and Media leading the losses, trading 4.44% and 3.45% lower respectively. Nifty Bank is down 3000 points in the last 30 days, indicating sustained pressure across banking stocks. The weakness extended to the broader market as investors pared exposure to mid- and small-cap stocks, with the Nifty MidCap index dropping 0.99% and the Nifty SmallCap index falling 0.81%. Among the sectors, Nifty Auto crashed more than 4% to lead losses, while Nifty Metal, Nifty Realty, Nifty Consumer Durables, Nifty Metal and several others plunged 2-3%. The overall market breadth turned sharply negative, with NSE seeing 594 advances against 2,789 declines, with 99 stocks remaining unchanged.
With a long weekend approaching, market participation could remain subdued on Thursday, though the ongoing decline is set to enter its eighth consecutive week, and since eight is a Fibonacci number, the probability of a short-term pullback cannot be ruled out. According to Dalal Street Investment Journal, the immediate support area for the index is placed between 22,500 and 22,600, with the index approaching its 200-week moving average, which remains an important long-term support zone. For the index to show early signs of recovery, it needs to close above the previous day's high of 22,809, with a sustained move above this level indicating improving buying interest. G Chokkalingam notes that "FPIs are also selling as oil prices remain firm and the rupee is quite weak," adding that the secondary market could remain weak in the short term unless crude prices fall significantly or the IPO boom loses momentum. Despite the broader weakness, pharmaceutical stocks offered some respite to the market, with the Nifty Pharma index emerging as one of the better-performing sectoral gauges amid the broader weakness. Bucking the trend, HDFC Bank and Kotak Mahindra Bank shares were up nearly 1% each, while the rupee is expected to remain in the 95.60–96.20 range, with the broader bias remaining cautious as per LKP Securities.
