Why Is Indian Stock Market Falling Today? The equity benchmark indices slipped on Monday as investors booked profits in select pockets and foreign fund outflows persisted ahead of the US Federal Reserve’s
policy decision.
By 3:30 PM, the BSE Sensex had slipped 609.68 points, or 0.71 per cent, to 85,102.69, while the NSE Nifty50 settled at 25,960.55, down 225.90 points, or 0.86 per cent. During the session, the Nifty dropped to an intraday low of 25,892, and the Sensex declined to 84,875.5.
Among Nifty50 constituents, InterGlobe Aviation, Bharat Electronics and Eternal were the top losers, falling up to 7 percent. On the other hand, HDFC Life Insurance and Tech Mahindra were among the notable gainers, rising up to 1 percent. Market breadth remained weak with 1,174 stocks advancing, 2,418 declining and 201 unchanged.
Key Factors Behind the Market Decline
Caution ahead of US Fed meeting:
Investors remained cautious ahead of the US Federal Reserve’s two-day meeting beginning December 9.
“Investors positioned cautiously ahead of the upcoming FOMC meeting, additional inflation releases, and year-end portfolio adjustments,” said Devarsh Vakil, Head of Prime Research at HDFC Securities. He noted that central banks in Australia, Brazil, Canada and Switzerland are also scheduled to meet this week, although no major policy moves are expected outside the Fed.
Persistent FII outflows:
Foreign institutional investors continued their selling streak, offloading equities worth Rs 438.90 crore on Friday — marking the seventh consecutive session of net outflows.
According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, the sustained depreciation of the rupee has been forcing FIIs to continuously sell Indian equities, keeping pressure on benchmark indices.
He also flagged the recent spike in Japanese bond yields as another emerging global risk. A sharp rise in yields could trigger fresh unwinding of the yen carry trade, potentially accelerating outflows from emerging markets like India.
“In brief, there is potential for high volatility in the near term,” Vijayakumar said.
Weak rupee:
The rupee slipped 16 paise to 90.11 against the US dollar in early trade, weighed down by higher crude prices and persistent foreign fund outflows. The currency opened at 90.07 before softening further amid strong dollar demand from corporates, importers, and overseas investors, forex dealers said.
Crude rises:
Brent crude, the global benchmark, edged up 0.13% to USD 63.83 per barrel. Rising crude prices typically put pressure on India’s import bill and elevate inflation worries, prompting caution in equity markets.
Positive fundamentals vs near-term risks:
Despite Monday’s sell-off, Vijayakumar said India’s macro backdrop remains supportive over the medium term. The economy posted a robust 8.2% GDP growth in Q2, and the RBI has revised its FY26 GDP forecast higher to 7.3%.
He noted that although low inflation has dragged nominal GDP growth and near-term corporate earnings, leading indicators still point to about 15% earnings growth in FY27—supportive for equities.
Volatility likely to stay
For now, markets remain torn between strong domestic economic signals and rising global risks, including currency weakness, persistent FII selling, and volatile overseas bond yields. With both tailwinds and headwinds in play, analysts expect heightened volatility to continue in the near term.
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