Indian equity benchmarks Sensex and Nifty extended steep losses on Tuesday, September 29, 2026, driven by soaring crude oil prices, rising bond yields, and heavy foreign fund outflows. The market rout erased nearly ₹4 lakh crore from BSE market capitalization in minutes as investors reacted to escalating geopolitical tensions.
The downward spiral on Dalal Street followed a punishing session on Monday, September 28, 2026, when the BSE Sensex tanked 1,124.02 points, or 1.52%, to settle at 72,771.72—its lowest closing level since March 30, 2026. The NSE Nifty similarly shed 360.25 points, or 1.56%, closing at 22,780.25. By Tuesday morning, selling pressure intensified further.
BSE Sensex and Nifty 50 Tumble in Early Trade
Equity indices opened deeply in the red on Tuesday as Sensex dropped 503 points to 72,260.09 in early exchanges before losses widened. By mid-morning, the benchmark hovered around 72,138.99, down 633 points, while the Nifty50 traded below the level at 22,586.60.
Major laggards across the 30-share Sensex included Bajaj Finance, HDFC Bank, Kotak Mahindra Bank, Reliance Industries, Asian Paints, and Infosys. Bajaj Finance bore the brunt of the selling, with its shares falling around 2%. Broader market indices mirrored the slump, with the Nifty Midcap 100 and Nifty Smallcap 100 both declining approximately 0.8%.
Bucking the bearish trend, a select few stocks managed gains. Sun Pharma, InterGlobe Aviation, and Adani Ports traded in positive territory.
Crude Oil Spikes and Fading Peace Hopes Rattling Global Markets
The primary catalysts for the selloff stem from surging energy markets and geopolitical friction in the Middle East. Brent crude futures jumped above $107 per barrel, while WTI crude futures moved past $94 per barrel, heightening fears of supply disruptions through the Strait of Hormuz.
Market optimism regarding a diplomatic resolution suffered a setback after US President Donald Trump rejected reports that Washington had offered Iran sanctions relief and access to frozen funds in exchange for nuclear concessions.
This is untrue.
President Donald Trump, via The Economic Times
That denial, responding to an Axios report citing US officials, came as US and Iranian officials held separate discussions with mediators on Monday to seek an end to the seven-month war.
The toll on financial visibility prompted stark warnings from major institutions. JPMorgan analysts noted that escalating tensions had shattered previous baseline assumptions about the conflict.
Foreign Fund Outflows and Rupee Drop to Two-Month Lows
Foreign Institutional Investors (FIIs) accelerated their exit from Indian equities, offloading shares worth ₹5,353.22 crore on Monday alone. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that total equity outflows through exchanges had reached ₹25,682 crore for the month through the previous week, with FIIs acting as net sellers in 15 of 19 trading sessions.
The sustained capital flight, paired with soaring oil import bills, dragged the Indian rupee past the 96-per-dollar mark to 96.1450, its lowest level in two months.
Simultaneously, bond yields continued climbing toward multi-year highs. Higher yields increase the appeal of debt instruments, adding downward pressure on riskier asset classes globally.
Monetary Policy Expectations Ahead of RBI Meeting
Tuesday’s session also coincided with the monthly expiry of Nifty’s futures and options contracts, historically a trigger for heightened volatility. Compounding the domestic pressure, the Reserve Bank of India is scheduled to convene its Monetary Policy Committee meeting from October 5 to October 7.
Markets are actively pricing in potential rate hikes as part of a broader global tightening cycle, following the US Federal Reserve’s rate increase earlier in the month.
