MARKETS 1d ago

Why is stock market down today? Sensex, Nifty 50 crash - Top 3 factors behind stock market decline explained

Livemint Markets

Published 12 Oct 2026, 08:25 am IST

The Indian stock market benchmarks, the Sensex and the Nifty 50, suffered significant losses on Monday, 12 October. The Sensex crashed 548 points, or nearly 0.76%, to end at 71,924.68, while the NSE counterpart Nifty 50 dropped 0.70% to settle at 22,363.35. However, the mid and small-cap segments exhibited resilience, as the Nifty Midcap 150 index ended flat, while the Nifty Smallcap 250 jumped 1.13%.

The decline in the equity benchmarks can be largely attributed to the following three factors:

Banking and IT have the most weight in the Sensex and the Nifty 50. So, a selloff in banking and IT stocks dragged the benchmarks lower. The Nifty Bank index declined 0.61%, while the Nifty IT index dropped 0.79% during the session.

However, the losses were not confined to only banking and technology stocks. Most heavyweight stocks witnessed strong profit-booking amid weak global cues and elevated oil prices.

Bharti Airtel, ITC, L&T, Reliance, and SBI were the top drags on the Sensex.

"Global and domestic macroeconomic concerns continued to weigh on sentiment. Although the rupee strengthened following the RBI’s recent measures to curb dollar demand, Brent crude remained elevated in the $102–105 a barrel range, limiting the relief on the inflation front," Ajit Mishra, SVP – research, Religare Broking, noted.

"Elevated global bond yields, escalating geopolitical tensions and persistent foreign fund outflows continued to act as major headwinds. Investors also remained cautious ahead of key domestic inflation data and the ongoing corporate earnings season, both of which could influence near-term market direction," said Mishra.

The dollar index traded near 102.5, an 18-month high, on Monday amid an escalating US-Iran conflict, keeping investors worried about inflation and its impact on the overall economy.

The dollar's rise is a major negative for emerging-market currencies like the rupee and for overall market sentiment. The dollar index is up 1% so far in October after a 2% jump in September.

When the dollar strengthens, investors tend to prefer US assets over emerging markets such as India. This triggers FPI selling, which puts pressure on the Sensex and Nifty.

Massive foreign capital outflows are a major reason for the downtrend in equity benchmarks. As per NSDL, foreign portfolio investors (FPIs) have sold off Indian stocks worth ₹44166 crore in October till Friday. So far in 2026, they have offloaded Indian stock worth ₹3,04,468 crore.

“The massive FPI selling is the primary reason why the Indian market is underperforming this year with negative Nifty returns YTD in 2026," V K Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.

"FPIs pulling money out of India is rational since the risk-free return from the 10-year US bonds is above 5.2%. So long as the US bond yields remain elevated, FPIs will continue to sell. The scenario will change when the valuations become attractive, and the risk-reward ratio turns favourable for investment. Elevated crude prices and high US bond yields are the two strong headwinds for the market now. So long as these headwinds remain strong, the market will remain under pressure," said Vijayakumar.

Shrikant Chouhan, the head of equity research at Kotak Neo, said that the intraday market formation is weak, and if the Nifty slips below 22,300, selling pressure may accelerate.

"Below 22,300, the market could retest 22,200–22,150. 22,400 is an immediate resistance zone for the bulls. A move above this level could trigger a bounce toward 22,500–22,640. The current market texture is volatile and non-directional; therefore, level-based trading would be the ideal strategy for day traders," said Chouhan.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, Nifty formed a long bear candle on the daily chart. The market appears to be poised to revisit the recent swing low of 22180 levels in the short term.

"The underlying trend of Nifty continues to be weak. A decisive slide below the crucial area of 22,200 could trigger sharp weakness down to the 21,700 level in the near term. However, any bounce could find strong overhead resistance around the 22,600 level," said Shetti.

Read all market-related news here

Wait for it…

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.

Originally reported by Livemint Markets.Source: livemint.com

Why is stock market down today? Sensex, Nifty 50 crash - Top 3 factors behind stock market decline explained

Wait for it…

Related reads