The Indian stock market witnessed a significant reversal on Monday, as benchmark indices shed their early gains to trade deep in the red. The Sensex tumbled more than 600 points to 71,854, while the Nifty 50 slipped below the 22,400 mark. This decline was accompanied by a jump in market volatility, with the India VIX surging over 7% to cross the 15-level. Despite the downturn in headline indices, the broader market showed signs of resilience, with the Nifty Midcap 100 and Smallcap 100 indices recording gains of up to 1%.
Several macroeconomic and geopolitical factors have contributed to this market pressure. Global bond yields have reached multi-year highs, with 10-year US Treasury yields climbing above 5.3% and Indian 10-year bond yields rising to a three-year peak of 7.37%. Furthermore, persistent selling by Foreign Institutional Investors (FIIs) has intensified, with outflows reaching Rs 45,125 crore within the first six sessions of October. This selling trend has been a consistent headwind for domestic equities throughout the year.
Market analysts suggest that external concerns, including escalating conflicts in the Middle East and weak global cues from Asian peers, have dampened investor sentiment. Additionally, profit booking was observed following a positive end to the previous week, which had snapped an eight-week losing streak. Sectoral performance remained mixed, with FMCG and PSU Bank indices leading the losses, while the Auto sector recorded a gain of over 1%.
Looking ahead, market experts believe that external headwinds such as high bond yields and elevated crude oil prices may continue to influence near-term trends. While FIIs are expected to persist with selling, Domestic Institutional Investors (DIIs) are currently acting as a counterbalancing force. Analysts remain cautiously optimistic, noting that while external pressures persist, India’s fundamental growth indicators, such as an estimated GDP growth of 7.1% for FY27 and stable corporate profitability, provide long-term support for the market.
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