The Indian stock market witnessed a brutal selloff on Thursday, with Sensex plunging 1,045.46 points, or 1.44%, to close at 71,593.24, its lowest level in 33 months and Nifty sinking 371.25 points, or 1.64%, to 22,231.80, a eighteen-month low. According to The Times of India, this marked the single biggest wealth erosion in five months, with investors losing nearly ₹10 lakh crore in a single day. The Sensex is now 16.91% below its all-time intraday high of 86,159.02 touched on December 1, 2025, while the Nifty has fallen 15.70% from its record peak of 26,373.20 reached on January 5, 2026. The broader equity market came under heavy selling pressure with small-cap and mid-cap indices declining over 2%, as investors turned cautious amid a broad-based correction. The overall market breadth was overwhelmingly negative, with 3,412 stocks declining on the BSE against just 1,018 advances, while the India VIX jumped 10.3% to 15.31 reflecting growing investor nervousness.
Foreign portfolio investors (FPIs) sold shares worth ₹12,943.58 crore ($1.3 billion), marking their biggest single-day outflow since May 29. As per The Financial Express, with today's sales, FPIs have sold shares of ₹2.92 lakh crore ($31.9 billion) since the beginning of the calendar year – the highest ever. In comparison, in CY25, they had sold shares worth ₹1.65 lakh crore ($18.8 billion). Domestic institutional investors bought equities worth ₹10,703.11 crore but failed to arrest the slide. The prolonged market correction has created a significant gap between market performance and perception, with large-cap stocks falling in double digits while mid- and small-caps have seen single-digit declines, yet the extended period of weak returns has created the feeling of a bear market. FPIs have sold Indian stocks worth ₹3,04,468 crore so far this year, after selling them for ₹1,66,286 crore in 2025, as reported by Mint.
The primary trigger for Thursday's market crash was fresh US-Iran tensions that pushed Brent crude above $105 a barrel, with Brent crude spot standing at $105.4, up 3.59%, and Brent crude futures at $104.98, up 4.77%. As per Business Standard, the trigger came from Washington where traders pointed to a report that the White House had asked the Pentagon for strike options against Iran ahead of the US midterm elections, with targets including power plants, nuclear facilities, and other military sites. Houthi attacks on two Saudi airports and a tanker incident in the Gulf added to the worries, pushing crude prices higher. Dealers noted that the market was paying higher, which is basically the risk premium, as oil was getting expensive because of fear of shortage rather than an actual supply shock. The Indian market, which is a net importer of oil, viewed these reports as a major negative, with the Indian rupee further depreciating amid the volatility. Post Thursday's close, Sensex was the worst-performing index this year among most of the major benchmarks around the world, with the aggregate market capitalisation of companies listed on BSE at ₹461 lakh crore.
Among sectors, Nifty Metal emerged as the worst hit, dropping 3.55% to close at 11,870.05, closely followed by Nifty Realty (-3.16%), Nifty Media (-2.79%), and Nifty Auto (-2.49%). As per Business Standard, all 23 sectoral indices closed deep in the red, led by sharp declines in heavyweight stocks across metal, realty, auto, and media. ITC, IndiGo, Power Grid, Bharat Electronics and Adani Ports were among the biggest Sensex losers. Reliance Industries alone accounted for 164 points, or 15.7%, of the Sensex's decline, while HDFC Bank, Bharti Airtel, ITC and L&T contributed another 409 points. The selloff was attributed to multiple factors including RBI's calibrated tightening stance, bond yields soaring to 24-year highs, oil jumping above $102/barrel amid Middle East tensions, massive FII selling streak, Fed rate hike worries, and weak global cues. Oil & gas, auto and healthcare stocks also faced heavy selling, with the Nifty Midcap 100 plunging 2.53% and Nifty Smallcap 100 losing 2.34%.
From Navratri 2025 to Navratri 2026, the Nifty 50 is down 11%, with index components falling up to 35%. As per capital market data, as many as 31 stocks are in the red in the index over this period, with ITC, Tata Motors PV, Infosys, Jio Financial, and TCS losing more than 30% each. Stocks such as HDFC Life, Maruti Suzuki, HDFC Bank, Hindustan Unilever, Max Healthcare, and M&M are down between 22% to 29%, while some 20 stocks in the index are down more than 12%. However, Shriram Finance has surged nearly 49% in this period, defying weak market sentiment, with stocks such as Titan Company, Adani Ports, and Hindalco jumping 21% to 27%. Nestle India, SBI, and Axis Bank have gained more than 10%. Experts expect the market to remain rangebound in the near term as long as oil prices remain elevated and bond yields continue rising, as noted by Anand Rathi Share and Stock Brokers. Q2 earnings are expected to remain healthy, but that is unlikely to charge up the bull as macroeconomic concerns keep investors cautious, with the start of the rate hike cycle globally and the potential negative impact of a weak monsoon on overall domestic growth and fiscal dynamics being key risks.
Despite the sharp correction, analysts advised investors to look at fundamentally strong companies for accumulation. Shruti Jain, Chief Strategy Officer at Arihant Capital Markets, noted that the broader-market correction could provide an opportunity to accumulate fundamentally strong companies at more attractive valuations. As reported by Mint, she emphasized that the recent decline appears to be driven largely by broad-based FII selling and market reaction to repo-rate expectations rather than fundamental deterioration in India's medium- to long-term growth story. She advised investors to use the correction selectively, reassess their portfolios and exit stocks where the fundamental investment case has weakened. According to Jigar S Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, the 18,800-19,000 zone has emerged as a crucial support area for the Nifty Smallcap 100 following the recent correction. Looking ahead, the market focus shifts to the Q2 earnings season, where management commentary on demand sustainability and input cost absorption will provide critical near-term direction, as noted by Vinod Nair, head of research at Geojit Investments. Pankaj Pandey from ICICI Securities noted that for the markets to witness a sustainable run, crude oil prices and bond yields need to come down, with most other parameters - whether you look at earnings growth or valuations in key sectors - being favourable for India.
