In a dramatic turn of events, India’s benchmark stock indices—the Sensex and the Nifty—suffered their worst single-day decline in over two months on October 4. This setback follows a remarkable year-to-date gain of 13-15%, highlighting the market’s volatility. The plunge was primarily driven by substantial selling from foreign portfolio investors (FPIs), who withdrew ₹15,243 crore, marking the largest daily outflow in four years. Adding to the market’s woes, escalating tensions in the Middle East have dampened investor sentiment.
Following Thursday’s steep drop, both the Sensex and the Nifty continued their downward trend into Friday, each declining nearly 1%. The Nifty dipped below the 25,000 mark during intra-day trading, ultimately closing at 25,015—a loss of over 200 points, or 0.90%. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, commented, “We anticipate that markets will consolidate next week, driven by cautiousness surrounding escalating geopolitical tensions. With the earnings season commencing soon, expect a focus on stock-specific movements, particularly among interest-sensitive stocks ahead of the RBI policy meeting. Although a rate cut is unlikely, the central bank’s commentary will be critical.”
This year’s most significant drop occurred on June 4, when the general election results led to a staggering 5.74% fall in the Sensex, driven by FPIs selling ₹12,436 crore worth of shares. Domestic Institutional Investors (DIIs) also played a role in that sell-off, with net sales of ₹3,319 crore. The second-largest decline happened on August 5, when the Sensex plummeted by 2.74%, amidst global market anxieties stemming from recession fears in the U.S. following disappointing employment data.