Key Factors Behind the Ongoing Decline in Sensex and Nifty
Sensex and Nifty face a prolonged decline driven by soaring crude oil prices, rising US bond yields, heavy FII selling, and a weakening rupee, leading to a historic seven-week losing streak for Indian markets.
Crude Oil Prices: Brent crude traded near USD 106.7 per barrel on September 28 as expectations for a US-Iran agreement dwindled, triggering an oil rebound. Because India relies heavily on imported oil, expensive crude fuels inflation worries, expands the import bill, and compresses corporate profit margins.
US Bond Yields: The US 10-year Treasury yield closed at 5.17% on September 25. Elevated yields increase the appeal of American bonds, prompting international investors to withdraw capital from emerging economies such as India. Furthermore, a higher discount rate diminishes the present value investors assign to future corporate earnings.
FII Selling: Reuters data shows that foreign institutional investors were net sellers during 15 out of 20 trading sessions in September, dumping approximately USD 2.7 billion in Indian equities. This brings their total net sales for 2026 to around USD 26.75 billion, preventing any meaningful market rebound.
Weak Rupee: Ongoing macroeconomic pressures have intensified due to a softening currency, costly oil, and elevated global yields. A depreciating rupee diminishes dollar-denominated returns for overseas investors—thereby spurring further divestment—while simultaneously driving up import expenses for Indian businesses and consumers.
Seven-Week Losing Streak: Marking its most prolonged weekly slump since the 2020 Covid-19 crash, the Nifty has suffered seven straight weeks of losses. Finishing at 22,716.20 on September 29 for a monthly decline of roughly 5.7%, this prolonged downturn leaves buyers hesitant, market sentiment depressed, and traders searching for definitive trend signals.
