Why did market fall today? Sensex ends 548 pts lower, Nifty below 22,400. 5 triggers behind today's selloff

The Indian stock market came under sharp selling pressure after opening in the green on Monday, with the Sensex tumbling nearly 1,000 points from the day’s high as concerns over persistent FII selling, rising bond yields and other headwinds overshadowed optimism.

Sensex dropped nearly 548 points to close at 71,925 while Nifty 50 declined almost 157 points to end the session at 22,363. This came while India VIX, which measures volatility in the market, jumped over 6% to cross 15. The Sensex had opened over 400 points higher before quickly reversing course and wiping out its opening gains.

ITC and Tech Mahindra shares dropped more than 3% each to lead losses on Sensex, while HUL, L&T, SBI, TCS and Bharti Airtel shares fell around 2% each. Bucking the trend, BEL, M&M and Kotak Mahindra Bank shares gained around 1% each. Broader markets, however, outperformed, with the Nifty Smallcap 100 index rising up to 1%.


Among the sectors, Nifty FMCG dropped nearly 2% while Nifty PSU Bank dropped more than 1% to lead losses. Nifty Auto meanwhile jumped nearly 1%. Despite benchmark indices trading in the red, the overall market breadth was only slightly negative, with NSE seeing 1,7,95 advances against 1,798 declines, while 113 stocks remained unchanged.

Here are the key factors pushing market down today:

1) Bond yields soar to multi-year highs

The global bond selloff continued to intensify, resulting in a sharp spike in bond yields that typically makes the comparatively lower-risk government debt contracts look more attractive in comparison to the equity markets. The 10-year US Treasury yield recorded its biggest quarterly increase of the 21st century in the three months ended September, Reuters reported. The yield on 10-year US Treasuries climbed above 5.3%, surpassing its 2007 peak and hitting its highest since early 2002. The 30-year yield has touched 5.6%, also not seen since 2002.

The India 10-year bond yield jumped to 7.37%, the highest in three years. This comes after the RBI announced measures to reduce surplus liquidity from the banking sector, announcing the lenders will have to maintain a minimum daily balance of 99% of the CRR requirement from the fortnight beginning October 16, up from 90% maintained so far.

Also Read | India’s 10-year bond yield hits 3-year high as RBI’s liquidity measure weighs on demand

2) Persistent FII selling

FII selloff has sharply intensified in October, with foreign investors net selling Indian equities worth Rs 45,125 crore in just six sessions in October so far, nearly the same as the total Rs 45,536 crore outflows recorded in the entire month of September. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that the rapid acceleration in FII outflows in October so far has taken the total FPI equity selling in 2026 to a whopping Rs 3,60,952 crore. “This massive FPI selling is the primary reason why the Indian market is underperforming this year with negative 13.87% Nifty returns so far in 2026,” he said.

Also Read | FII selloff intensifies! Foreign investors sell Indian equities worth Rs 45,000 crore in just 6 sessions. What can reverse the trend?

3) Middle East conflict escalates

Iran has rejected the latest US response to its proposal to end the war, calling it “insufficient" while warning of attacks on regional data centers and cables if fighting intensifies again. The head of Iran’s Supreme National Security Council Mohsen Rezaei added that Washington needs to clarify the issues that remain unclear to ​Tehran.

Meanwhile, Yemen’s Houthis claimed responsibility for a strike on Riyadh’s international airport on Saturday that killed 13 people and wounded more than 300. Saudi authorities also reported injuries in another attack on the airport on Sunday. Trump said on Saturday that the United States was considering joining Saudi strikes against the Houthis, as the conflict spreads from the wider war with Iran launched by the US and Israel in February.

4) Weak global cues

Dalal Street is accompanying Asian peers in the downturn today. South Korea’s Kospi dropped nearly 4% while Japan’s Nikkei also slipped into the red. China’s Shanghai Composite along with Taiwan Weighted also traded with losses.

Wall Street indices closed in the green last week, but Dow Jones futures currently trade with muted gains.

5) Profit booking

Today’s downturn on Dalal Street comes after Sensex and Nifty ended the previous week in the green, snapping an eight-week-long losing streak despite strong headwinds warranting caution. Today’s downturn may have also been driven by profit booking.

What lies ahead for Dalal Street?

The market is going through a stage wherein external headwinds are dominating the domestic tailwinds, said V K Vijayakumar, Chief Investment Strategist, Geojit Investments. He noted that elevated crude prices and high US bond yields will continue to impact the market. FIIs will continue to sell in the near-term and DIIs will continue to absorb the FII selling. This is the likely near- term market scenario, according to the analyst. “The million dollar question is how this scenario plays out and where will the market be, say, a few months from now?”

Vijayakumar noted that the external headwinds and sustained FII selling have made India one of the worst performing markets this year with a negative return of nearly 14% in 2026 so far. The sharp correction has made valuations fair and, in many segments, attractive, he said, adding that this, along with the impressive GDP growth estimate of 7.1% for FY27 and improving corporate profitability, provides strong fundamental support to the market.

“Therefore, investors can accumulate fairly-valued growth stocks ignoring the uncertainty and volatility in the market. For investors with a medium-to-long-term investment horizon, this market provides value buying opportunities. Patience is the key. If crude declines sharply following favourable developments in the Middle East, the market can rally significantly from the current levels,” he said.

Also Read | Nifty Outlook: Can bulls sustain recovery after 8-week losing streak?

Technical levels for Nifty

Going forward, the 22,350–22,330 zone could act as immediate support for Nifty, according to Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities. He noted that a decisive move below this zone could trigger renewed selling pressure towards 22,200.

On the upside, the 22,660–22,680 zone, coinciding with the 10-day EMA, could act as an immediate hurdle, according to the analyst who feels that a sustained move above this zone could trigger short covering and extend the pullback towards 22,820. Despite the recent recovery, confirmation through sustained buying remains necessary, he warned.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.