Indian stock markets came under heavy selling pressure on Thursday, with the Sensex falling more than 500 points and the Nifty 50 slipping below the 22,500 mark as investors reacted to the Reserve Bank of India’s latest policy signal, rising crude oil prices and continued foreign fund outflows.
The Sensex was trading below 72,000 around late morning, while the Nifty 50 fell below 22,400, extending the previous session’s decline. By around 11:30 am, the sharp sell-off had wiped nearly ₹7 lakh crore from the market capitalisation of companies listed on the BSE.
The weakness followed the RBI’s decision on Wednesday to raise the repo rate by 25 basis points to 5.50%, its first rate hike in nearly four years. More importantly for investors, the central bank changed its monetary policy stance from “neutral” to “calibrated tightening”.
The change has made the market more cautious because it signals that the RBI is prioritising inflation control and is not currently preparing for rate cuts. Higher interest rates can increase borrowing costs for companies and consumers, potentially affecting investment, housing demand and discretionary spending.
The RBI’s decision came at a difficult time for global markets. Brent crude climbed above $102 a barrel as concerns over supply disruptions in the Middle East and risks around the Strait of Hormuz continued to unsettle investors. Rising oil prices are particularly important for India, which depends heavily on imports to meet its energy requirements.
Higher crude prices can put pressure on inflation, widen the import bill and weigh on the Indian rupee. The rupee was trading close to ₹96.80 against the US dollar, near its record-low levels, adding another layer of uncertainty for domestic equities.
Foreign institutional investors also remained sellers. FIIs sold shares worth around ₹6,121 crore on Wednesday, while domestic institutional investors bought about ₹4,597 crore. The continued foreign selling has added to the pressure on the benchmark indices at a time when global bond yields and the dollar remain elevated.
The stock-specific action, however, offered a more mixed picture. IT stocks stood out on an otherwise weak trading day. Tech Mahindra, HCL Technologies, Tata Consultancy Services and Infosys were among the top gainers, rising as much as 2% and providing some support to the indices. Titan also featured among the gainers.
The strength in technology shares comes as investors turn their attention to the September-quarter earnings season. TCS is scheduled to announce its results later on Thursday, making the IT sector one of the key areas to watch. The market is looking for signs of improving demand, deal wins and guidance from major software exporters.
On the other side, ITC, Adani Ports, IndiGo, Power Grid and Reliance Industries were among the biggest losers on the Sensex, with several of these stocks falling sharply. ITC was down around 3%, making it one of the most prominent drags on the benchmark.
The broader market also reflected the risk-off mood. Mid-cap and small-cap stocks came under pressure, with the Nifty Midcap 100 and Nifty Smallcap 100 falling as much as 2%. Sectorally, metals were among the worst hit, with the Nifty Metal index declining around 3%. Realty, oil and gas and other rate-sensitive segments also faced selling pressure.
Market breadth remained firmly negative, showing that the selling was not restricted to a handful of heavyweight stocks. More than 2,600 stocks were in the red on the NSE, compared with fewer than 700 advances around late morning.
Analysts are now watching the 22,400-22,500 zone closely for the Nifty. A decisive break below this support could increase selling pressure and bring 22,300 into focus. On the upside, 22,800 remains an important hurdle for the index. A sustained move above that level could improve sentiment and reopen the path towards 23,000.
The immediate direction of the Indian stock market is likely to depend on a combination of factors: the trajectory of crude oil, the rupee’s movement, foreign institutional flows, global bond yields and the first set of corporate earnings. With the RBI now signalling a tighter policy approach, investors are likely to remain selective rather than chase a broad market recovery.
The focus will increasingly shift to corporate earnings, particularly from large IT companies. Strong results and positive management commentary could provide some relief to Dalal Street, but sustained recovery in the Sensex and Nifty will require greater clarity on inflation, oil prices and global geopolitical risks.