Why is market falling today? Sensex plummets over 1,200 points, Nifty below 23,100. 5 factors behind today's D-Street bloodbath

The Indian stock market slipped into the deep red on Thursday, with Sensex and Nifty falling nearly 1.5% as bond yields surged to 19-year highs, along with other factors that spooked investors.

At 1:50 pm, Sensex crashed over 1,200 points to trade at hit the day's low of 73,591, while Nifty 50 dropped over 350 points to trade below 23,100 mark.

Bajaj Finance shares crashed more than 5% to lead losses on Sensex, while Axis Bank and Bajaj Finserv shares fell 3-4%. IndiGo, Kotak Mahindra Bank, Asian Paints, HDFC Bank and Trent shares fell 1-2%.


Broader markets also saw a sharp selloff, with Nifty Midcap 100 and Nifty Smallcap 100 indices falling 1% each. All sectoral indices traded in the red, with Nifty Private Bank and Nifty Financial Services falling around 2% each. The overall market breadth turned sharply negative, with NSE seeing 2,019 declines against 679 advances, while 99 stocks remained unchanged.

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Here are the key factors behind the sharp downturn in market today.

1. Bond yields soar to 19-year high

US 10-year Treasury bond yields surged to their highest level since 2007, after data showed US business activity racing to a more-than-five-year high in September. Interest rate-sensitive 2-year Treasury yields briefly crossed 4.9%, the highest since May 2024. The benchmark 10-year yield jumped 13.89 basis points to 5.106%, the highest since 2007 and its biggest one-day increase since April 2025.

Surging bond yields make debt markets more attractive, which in turn often leads to some downturn in equity markets.

2. Fed rate hike expectations

The downturn in stock market was further exacerbated by a sharp rise in expectations of steep rate hikes by the US Federal Reserve. Fed funds futures traders are now pricing in a 66% chance of an October rate hike, up from 53% earlier in the day. This comes after data showed US business activity surged to a more than five-year high in September.

3. Oil prices jump

Adding fuel to the worries, oil prices jumped back above $102 per barrel after falling below $99 earlier yesterday. Iran and the United States remain at odds over how to end the war. The comments came after Iranian President Masoud Pezeshkian told the UN General Assembly that Tehran would never surrender to US pressure.

Earlier on Wednesday, Iran's security chief Mohsen Rezaei said the Strait of Hormuz would remain closed until Iran's conditions were met. US Secretary of State Marco Rubio said on Wednesday that reaching a deal with Iran would require hard work over a period of time. He also said US President Donald Trump had military options.

4. Rupee tumbles

The Indian rupee tumbled 14 paise to 95.87 against the US dollar in early trade amid the sharp surge in oil prices and bond yields. “The rupee continues to hover in the 95.60-95.95 zone, with persistent FII selling in Indian markets keeping sentiment cautious. Going ahead, US-Iran developments, Xi Jinping’s US visit and UN meeting updates could keep currency markets volatile,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

What lies ahead for Dalal Street?

The sharp spike in Brent crude above $102 and the US 10-year bond yield rising to 5.11% will weigh on the market today, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. He added that as long as these two global headwinds remain, the prospects of a smart recovery in the market appear remote.

The recent market trend has been a sustained focus on mid- and small-caps. Growth stocks in these segments are witnessing sustained accumulation, irrespective of their elevated valuations, the analyst noted, adding that this trend will change, but its timing will depend on the trend in crude prices and bond yields.

“Today the market’s focus will be on the NSE listing. Therefore, everything else will be pushed to the background. If the NSE stock becomes available in today’s trade at a fair price, that would be a good opportunity for long-term investors to have a blue chip in their portfolio,” the analyst said.