Summary of this article
Sensex crashed over 1,000 points by close after a sharp final 30-minute selloff
MSCI rebalancing-triggered institutional selling led to heavy pressure in heavyweight stocks
Weak monsoon outlook and West Asia tensions further hurt investor sentiment
Equity benchmark indices traded in a narrow range for most of the session on May 29, with investors largely staying on the sidelines amid mixed global cues. However, sentiment turned sharply negative in the final 30 minutes of trade, triggering a sudden selloff that dragged frontline indices significantly lower by the closing bell.
The sudden decline wiped out intraday stability as heavy selling pressure emerged across key sectors, particularly in financials and heavyweight stocks. The total market capitalisation of all BSE-listed companies declined by nearly Rs 5 lakh crore during the session, leading to a sharp erosion in investor wealth.
The Sensex tumbled nearly 770 points during the last leg of trading, while the Nifty also slipped about 225 points.
By the closing bell, Sensex was down 1,092.06 points, or 1.44 per cent, at 74,775.74. Likewise, Nifty 50 settled 359.40 points, or 1.50 per cent, at 23,547.75.
Broad-Based Sell-Off, IT Bucks Trend
Barring IT, all other major sectoral indices closed in red. The Nifty Oil & Gas emerged as the biggest loser, falling around 2.50 per cent. Nifty IT, which was trading around 2 per cent higher before the sudden sell-off came, ended with just 0.60 per cent gains.
The sell-off was broad-based, as the Nifty Midcap 100 fell about 1.30 per cent, while the Nifty Smallcap 100 witnessed a decline of 0.85 per cent. Nifty 500, which represents more than 92 per cent of the total free-float market capitalisation of all the NSE-listed companies, also fell 1.35 per cent.
Among Nifty 50 constituents, Power Grid, InterGlobe Aviation, and ONGC were the top losers, falling between 3 per cent and 4.11 per cent. Following these, Max healthcare, Eicher Motors, Tata Consumer, JSW Steel, Bajaj Finance, Sun Pharma, NTPC, HDFC Life, Reliance Industries, and Tata Steel, fell in the 2 per cent to 3 per cent range.
Here's What Happened
Analysts attribute the final minute sell-off to the MSCI May 2026 index rebalancing, which saw heavy flows by large passive funds.
Vinod Nair, head of research at Geojit Investments, told Outlook Money, “MSCI rebalancing and a reduction in India’s weight prompted selling in heavyweights by FIIs, resulting in a sharp decline in the main indices during the late hours.”
He added that investor sentiment was also hit after the India Meteorological Department (IMD) lowered its southwest monsoon forecast for 2026 to 90 per cent of the long-period average from 92 per cent estimated earlier in April. The weaker monsoon outlook weighed on consumer-focused sectors such as FMCG and auto.
Nair further said rising tensions in West Asia and repeated disruptions in ceasefire talks due to localised military strikes added to volatility in global markets.
Ajit Mishra, senior vice president (research) at Religare Broking, in a post-market note said, "The sudden spike in volatility was largely attributed to the MSCI May 2026 index rebalancing, which triggered heavy passive institutional flows during the closing session.
He added that persistent weakness in heavyweight stocks such as Reliance Industries and ITC, along with sustained selling pressure in banking majors including HDFC Bank and ICICI Bank, further accelerated the market decline.
