Indian equity markets extended their decline on Monday, with the Sensex crashing 696.64 points or 0.93% to 74,032.63 and Nifty 50 falling 197.20 points or 0.85% to 22,948.95 by noon. According to latest reports, the benchmarks were trading near day's lows, with the Nifty 50 touching an intraday low of 22,922.95, down 223.20 points or 0.96%. The India VIX jumped 5.6% to 14.84, indicating heightened volatility expectations among traders. Earlier, the markets had shown signs of recovery with the Sensex climbing 413 points to close at 74,729 and Nifty rising 148 points to 23,146 on October 16, but the recent session saw a sharp reversal.
Private banks emerged as the biggest drag on the indices after Q2 earnings disappointed investors and analysts. Axis Bank, HDFC Bank and Infosys were the top losers on the Nifty 50, with Nifty Private Bank being the worst-performing sector. Axis Bank fell as much as 5% despite reporting a 38% year-on-year increase in standalone net profit in Q2FY27, as higher operating expenses led to a slight earnings miss, offsetting strong NII growth and lower-than-expected provisions. HDFC Bank slipped 2% on concerns over pressure on net interest margins and modest earnings growth. The stark contrast continued with PSU bank stocks surging up to 8% led by Punjab National Bank after its Q2FY27 earnings beat estimates, while private lenders fell up to 5% despite reporting profit growth.
Weak global cues weighed heavily on tech stocks after US markets ended sharply lower on Friday. US stocks ended with the Nasdaq Composite dropping 2.19%, the S&P 500 falling 1.22% and the Dow Jones Industrial Average losing 0.55% after renewed selling in AI-related technology names. Asian markets also fell, with South Korea's Kospi declining more than 3% amid lingering worries about how massive AI investments will be funded ahead of a busy earnings week. IT stocks added to the pressure, with LTM falling nearly 6% after its Q2 consolidated net profit dropped 4.6% year-on-year, contributing to the broader market decline.
Brent crude fell 2.49% to $107.12 a barrel today, down $2.74, but the relief was minimal as oil remains well above where it was earlier last week after a sharp rally that ended with Brent settling at $109.86 on Friday. Oil prices remain elevated at $108 per barrel despite today's decline, creating significant headwinds for Indian markets. Brent crude futures declined 2.5% to $107 but remained above comfortable levels, with the crude prices jumping 11% last week amid tightening supplies and strong shipping fuel demand. Iranian strikes on tankers near the Strait of Hormuz disrupted oil flows, with Dr V K Vijayakumar from Geojit Investments noting that the escalation of tensions in Hormuz and the consequent surge in Brent crude to $109 will act as a strong headwind to the market. Higher crude prices pose macroeconomic risks for India as they weaken the current account deficit and pressurise the domestic currency.
The selling pressure extended to the broader market, with Nifty Midcap 100 down 351.45 points or 0.59% to 58,778.3 and Nifty Smallcap 100 falling 117.40 points or 0.61% to 19,024.4 by noon. Foreign portfolio investor selling has hit a six-month high in October as elevated crude oil prices continue to impact market sentiment. The overall selling this month is at ₹52,100 crore, the third highest this year after ₹60,847 crore sold in April. Finance Minister Nirmala Sitharaman has flagged capital outflows as one of the biggest risks for India in 2027 amid excess market liquidity. So far this year, FPIs have sold a record ₹3.12 trillion, highlighting the sustained pressure on foreign investment flows into Indian markets.
