The Indian stock markets witnessed a sharp decline on May 29, with the BSE Sensex falling 1092.06 points or 1.44% to close at 74,775.74, while the NSE Nifty declined 359.40 points or 1.50% to end at 23,547.75. According to reports from The Hindu and ET Now, the sharp losses resulted in a significant impact on market capitalisation, with the total market cap of all BSE-listed companies being wiped off nearly ₹6 lakh crore, bringing it down to ₹465 lakh crore. This represents one of the most substantial single-day declines in recent market history, with the India VIX jumping around 9% to 16.35 reflecting heightened market volatility. The market opened on a flat note and traded in a rangebound manner for most of the session after reports suggested that the United States and Iran had reached a tentative agreement to extend their ceasefire. However, sharp profit booking in the final hour of trade dragged the NIFTY 50 to day's low at 23,484.75, with the index eventually settling near the 23,547.75 mark. The Sensex opened at 75,988.51 and touched an intraday high of 76,220.02 before slipping to a low of 74,589.11, while the Nifty50 opened at 23,902.15, hit a day's high of 24,002.80, and fell to an intraday low of 23,484.75. Among 30 Sensex firms, Power Grid, InterGlobe Aviation, NTPC, Mahindra & Mahindra, Tata Steel and Bajaj Finance were the major laggards, while Tech Mahindra, HCL Tech, Larsen & Toubro and Infosys were the gainers.
A key trigger for Friday's selloff was the India Meteorological Department's forecast of below-normal rainfall during the June-September monsoon season, with June-September southwest monsoon rainfall over India expected to be 90% of the long-period average with a model error of 4%. As reported by The Hindu, while the northeast is likely to witness normal rainfall this monsoon season, the remaining parts of the country may see below normal rainfall. As reported by The Times of India, M Ravichandran, secretary at the Ministry of Earth Sciences, announced the forecast, noting that the projection, which points to the weakest monsoon outlook in 11 years, has raised concerns about food inflation and rural demand. According to Vinod Nair, Head of Research at Geojit Investments, "The market witnessed broad-based selling pressure following the IMD's monsoon forecasts to 90 per cent of the long-period average, raising concerns among investors. The prospect of deficient rainfall, coupled with the increasing likelihood of an El Niño weather pattern, has heightened fears of elevated food inflation in the coming month." He added that "The downside risk appears partially mitigated by the recent moderation in crude oil prices and bond yields." The IMD's forecast has particularly worried investors given the combination of weak monsoon expectations and ongoing El Niño conditions that continue to influence weather patterns across the country.
Investors also remained cautious amid uncertainty surrounding efforts to convert the current US-Iran ceasefire into a broader peace agreement. According to The Hindu, reports suggested that Washington and Tehran have agreed to extend the ceasefire for 60 days, although the arrangement still awaits approval from US President Donald Trump. US Vice President JD Vance said negotiators were 'very close' to a peace deal but were still 'going back and forth on a couple of language points', including the 'question of enrichment'. The lack of clarity over a final agreement has kept geopolitical concerns alive in global markets, with the Strait of Hormuz remaining one of the world's most important crude oil shipping routes, keeping global investors cautious about potential supply disruptions. In the commodities market, Brent crude for July 2026 settlement dropped 1.52% to $92.29 a barrel, adding to market concerns about energy prices, while WTI crude futures declined around 2% to trade near $87 per barrel. In Asian markets, South Korea's benchmark Kospi, Japan's Nikkei 225 index and Hong Kong's Hang Seng index ended higher, while Shanghai's SSE Composite index settled lower. Markets in Europe were trading in positive territory, while U.S. markets ended higher on Thursday.
Sectoral performance showed widespread weakness with almost all sectors ending deep in the red, indicating broad-based risk aversion among investors. According to The Hindu, Nifty Oil & Gas dropped around 2.5% and Nifty Metal tumbled over 2% to lead losses, while Nifty IT closed marginally higher. The Nifty Bank index also came under pressure and dropped 614 points, or 1.12%, to settle near the 54,200 level. Among individual stocks, Power Grid shares crashed more than 4% to emerge as the top loser on Sensex, followed by InterGlobe Aviation (IndiGo) declining 3.5% ahead of its Q4 results. Other major decliners included NTPC, Mahindra & Mahindra, Tata Steel, and Bajaj Finance shares declining over 2% each. However, Tech Mahindra and HCLTech shares were up nearly 2%, bucking the broader market trend. Top losers on the Nifty included Eicher Motors, InterGlobe Aviation, Power Grid Corporation of India, Oil and Natural Gas Corporation, and Bajaj Auto. On the gaining side, Tech Mahindra, HCL Technologies, Infosys, Wipro, and Larsen & Toubro ended higher. Among sectoral indices, all sectors except IT (up 0.6%) ended in the red, with auto, metal, energy, and oil & gas indices falling around 2% each. Bank Nifty, Private Bank, Financial Services, FMCG, and Pharma declined over 1% each. The Nifty Smallcap 100 and Nifty Midcap 100 indices fell around 1% each, extending the weakness beyond frontline indices.
Another key factor weighing on sentiment remained continued foreign institutional investor selling, with foreign investors selling Indian equities worth ₹1,042.70 crore on Wednesday (May 27, 2026), as per exchange data reported by The Hindu. According to The Times of India, FIIs have remained net sellers in 13 of the 18 trading sessions so far in May, with the continued outflows adding pressure on domestic markets despite relatively strong corporate earnings. The weakness extended beyond frontline indices, with the Nifty Smallcap 100 and Nifty Midcap 100 indices falling around 1% each. On Wednesday (May 27, 2026), the Sensex declined 141.90 points, or 0.19%, to settle at 75,867.80, while the Nifty skidded 6.55 points, or 0.03%, to end at 23,907.15. However, analysts pointed to encouraging earnings trends, with VK Vijayakumar of Geojit Investments noting that "Q4 results have been better-than-expected. The double-digit earnings growth in financials, automobiles and metals is impressive." He added that "Trends indicate that FY27 will be good for defence, capital goods, renewable energy, financials and pharmaceuticals. Growth sectors like digital platform companies are getting accumulated on declines."
The rupee also strengthened significantly, rising 53 paise to close at 95.05 against the US dollar from 95.69 in the previous session, according to a Reuters report citing traders. The Reserve Bank of India likely intervened in the foreign exchange market ahead of Friday's opening to support the domestic currency. This currency movement provided some relief to market participants amid the broader selloff. The India VIX jumped around 9% to 16.35, reflecting heightened market volatility, while Brent crude futures fell nearly 2% to below $92 per barrel, while WTI crude futures declined around 2% to trade near $87 per barrel. The easing of crude oil prices, combined with the rupee's strength, partially offset some of the negative impact from geopolitical uncertainties and monsoon concerns. In Asian markets, South Korea's benchmark Kospi, Japan's Nikkei 225 index and Hong Kong's Hang Seng index ended higher, while Shanghai's SSE Composite index settled lower. Markets in Europe were trading in positive territory, while U.S. markets ended higher on Thursday.
