Summary of this article
Sensex fell over 1,000 points as crude prices and US yields rose
Iran-US tensions pushed oil prices higher, raising inflation concerns
Stronger dollar and foreign outflows added to pressure on Indian equities
Domestic equities came under heavy selling pressure on September 28, extending the losses from the previous week as surging oil prices and rising bond yields, amid escalating tensions between Iran and the US, weighed on investor sentiment.
At 10:45 am, the BSE Sensex was down 997.68 points, or 1.35 per cent, at 72,898.06. The NSE Nifty 50 fell 313.70 points, or 1.36 per cent, to 22,826.80.
The sell-off extended beyond the benchmark indices, with the broader market also coming under pressure. The Nifty Midcap 100 and Nifty Smallcap 100 indices were down around 1.25 per cent and 1.32 per cent, respectively, at the same time.
The sharp sell-off erased Rs 6.90 lakh crore from BSE-listed companies’ market value, bringing the total market capitalisation to around Rs 476 lakh crore.
All sectoral indices were trading in the red. Nifty PSU Bank fell the most, down around 2.26 per cent, followed by Nifty Bank, which was down 1.77 per cent.
Nifty Financial Services and Nifty Private Bank also fell around 1.60-1.70 per cent. Nifty Realty, Nifty Auto, Nifty FMCG, Nifty Metal and Nifty Oil & Gas were also down more than 1 per cent.
Among the Nifty 50 stocks, Tata Consumer Products, Adani Enterprises, Hindustan Unilever, Bajaj Finance, HDFC Bank and Bharat Electronics were the top losers, each falling more than 2 per cent.
As many as 48 of the 50 Nifty stocks were trading in the red. Dr Reddy’s Laboratories and Coal India were the only gainers, rising 1.30 per cent and 0.28 per cent, respectively.
Why Is Stock Market Falling Today
Here are the key reasons why stock market went deep into the red on September 28.
US-Iran Peace Talks Stalemate
Tensions between the US and Iran have increased after Washington rejected Tehran’s proposal for a seven-day ceasefire. Iran made the proposal conditional on reopening the Strait of Hormuz and restarting nuclear talks.
Iranian Foreign Minister Seyyed Abbas Araghchi said Tehran was open to diplomacy but warned that it was prepared for an “apocalyptic war” if the US attacked again. Iran has also sought the release of its frozen assets and the ability to sell oil as part of any settlement.
US President Donald Trump, meanwhile, said further military action remained possible and reiterated that Iran must not be allowed to develop nuclear weapons.
Rising Crude Oil Price
The stalemate over US-Iran peace talks have added to concerns over inflation as crude oil prices remain elevated. Brent crude futures were trading above $107.50 a barrel, up 3.31 per cent, while West Texas Intermediate (WTI) crude was above $94.50 a barrel, up around 2 per cent from the previous close.
Rising US Fed Rate Hike Bets
Higher oil prices could keep inflation elevated and make it harder for the US Federal Reserve to cut interest rates. Markets are now also pricing in the possibility of another rate hike in October.
The CME FedWatch Tool showed a 68.1 per cent probability of a 25 basis point rate hike. The Fed had already raised its benchmark interest rate by 25 basis points to 3.75-4 per cent at its September meeting.
Higher yields on US assets can make emerging-market equities less attractive to foreign investors and encourage capital to move towards US markets.
For oil-importing economies such as India, higher crude prices can also widen the trade deficit, pressure the rupee and hurt corporate margins in sectors that have high fuel or input costs.
Stronger Dollar, Weaker Rupee
The US Dollar Index rose to 101.39, its highest level in two months, adding to pressure on emerging-market equities.
A stronger dollar can trigger foreign outflows from emerging markets and increase imported inflation and dollar-denominated borrowing costs.
According to National Securities Depository (NSDL) data, foreign portfolio investors (FPIs) have sold a total 2.41 lakh crore worth of domestic equities so far this year. In September alone, up to 25th, FPIs have sold Rs 17,131 crore equities.
A weaker rupee can further weigh on investor sentiment, particularly when it comes alongside higher US bond yields and elevated crude oil prices. The currency weakened 25 paise to 96.14 against the US dollar in early trade on September 28.
What Could Help Equities Move Out Of The Current Weak Phase
The outlook for equities in 2026 will largely depend on how global risks evolve and whether domestic fundamentals remain resilient. Sachin Gupta, vice president of research at Choice Broking, said, “A sustained improvement in global risk sentiment could be the key catalyst for the market to move out of this prolonged weak phase.”
He said easing geopolitical tensions, softer crude oil prices, greater clarity on the US interest-rate outlook and moderation in US bond yields could improve investor confidence and reduce pressure on emerging markets. “A revival in FII inflows, along with continued support from domestic institutional investors, would further strengthen market sentiment,” Gupta said.
On the domestic front, Gupta said healthy economic growth, improving corporate earnings and continued government spending could provide additional support. “If global uncertainties ease while India’s domestic fundamentals remain resilient, investor confidence could improve and create the conditions for a broader recovery in equities,” he added.
