Nifty Falls 2.78% as Oil, Foreign Selling and Yields Pressure Equities

Mumbai, Oct 3: Indian equities extended their decline through the holiday-shortened week from 28 September to 1 October 2026, with trading suspended on 2 October for Gandhi Jayanti. The Nifty 50 fell 2.78% from its 28 September opening level of 23,064.90 to 22,421.95, while the Sensex declined from 73,734.83 to 71,909.70. Both benchmarks recorded their eighth consecutive weekly decline, extending the longest such losing streak in 25 years.

Nifty Falls 2.78% as Oil and Yields Rise

The week’s decline began with a sharp sell-off on 28 September, when the Nifty fell 1.56% and the Sensex dropped 1.52%. Brent crude rose sharply after diplomatic efforts involving the US and Iran failed to resolve concerns surrounding oil supplies and the Strait of Hormuz. Brent touched around $108 a barrel during the session, while India’s dependence on imported crude increased concerns about inflation, the trade balance and corporate margins.

The pressure continued on 29 September, although the benchmarks recovered from their intraday lows. The Nifty closed at 22,716.20, down 64.05 points, while the Sensex ended at 72,529.07, down 242.65 points. Foreign selling, crude prices and elevated US Treasury yields remained the principal external pressures.

On 30 September, the Nifty fell another 0.42% to 22,620.45, while the Sensex slipped 48.78 points to 72,480.29. The session produced some sector-specific buying, particularly in banks and infrastructure-linked stocks, but it did not reverse the broader weekly decline.

The final trading session on 1 October brought another sharp decline. The Nifty lost 198.50 points, or 0.88%, to 22,421.95, while the Sensex fell 570.59 points, or 0.79%, to 71,909.70. The Nifty touched 22,217.30 intraday, while the Sensex fell to 71,300.16 before recovering some ground.

The market therefore entered the Gandhi Jayanti holiday on 2 October after four consecutive sessions of declines. The NSE and BSE remained closed on Friday, making 1 October the final trading session covered by this week’s market performance.

Nifty’s 863-Point Range Shows the Week’s Pressure

The Nifty 50 opened the week at 23,064.90 on 28 September and closed at 22,421.95 on 1 October, losing 642.95 points, or approximately 2.79%. Its weekly intraday high was 23,080.25, recorded on 28 September, while its weekly low was 22,217.30 on 1 October. This produced a trading range of about 862.95 points.

The previous week’s close was 23,140.50, meaning the index also lost approximately 718.55 points, or 3.11%, from the previous Friday’s close to the week’s final close.

The Sensex opened at 73,734.83 on 28 September and closed at 71,909.70 on 1 October. It lost 1,825.13 points, or approximately 2.48%, during the four trading sessions. Its weekly high was 73,740.85 on 28 September and its weekly low was 71,300.16 on 1 October.

The Nifty Next 50 also weakened. It closed at 68,981.35 on 1 October, down 1.10% that day. From its 28 September close of 70,309.50, it declined by roughly 1.89%. Its 28 September intraday range was 70,205.15–71,563.50, while the 1 October session ranged between 68,110.50 and 69,683.90.

The movement across the three benchmarks showed that selling was not restricted to the largest companies. Broader indices also declined, with the Nifty 500 down 3.08% over the week and the Nifty Midcap 150 down 3.68%.

Midcaps and Smallcaps Fell More Than Nifty

The broader market weakened alongside the benchmarks. The Nifty 500 closed at 21,857.75 on 1 October, down 3.08% over one week. Its weekly range was 22,005.15–22,771.60. The index recorded 112 advances against 385 declines on 1 October, showing the breadth of the final-session selling.

The Nifty Midcap 150 fell 3.68% over the week to 21,643.85. It opened at 21,803 on 1 October and traded between 21,374.70 and 21,843.85 during that session. Its weekly high was 22,746.20, while its weekly low was 21,819.20.

The Nifty Smallcap 250 declined 3.12% over the week to 17,589.05. On 1 October, it recorded 45 advances and 205 declines, with the index falling 1.18%. Its weekly high was 18,335.95, compared with a weekly low of 17,650.50.

The BSE 500 fell 3.03% over the week to 34,221.41, while its weekly range was 34,436.04–35,634.99. The BSE 100 declined 3.60% over the week. The BSE 150 MidCap index fell 3.72%, closing at 15,997.57.

These figures show a broad-based decline rather than a movement limited to large-cap benchmarks. Mid-cap and small-cap indices recorded larger weekly losses than the Nifty 50, while the advance-decline ratio remained heavily tilted towards declines during the final session.

Auto and FMCG Bear the Heaviest Sector Pressure

Sector rotation was visible throughout the week. The Nifty Auto index fell 5.03% over the week, closing at 25,384.95 on 1 October. It dropped 3.46% during the final session alone. The index opened at 26,117.75 and reached a high of 26,125.25 and a low of 25,087.65.

The pressure came as September vehicle-sales data produced a mixed picture. Hero MotoCorp reported total September dispatches of 7,66,348 units, up 12% year on year, while domestic dispatches rose 14% to 7,39,018 units. However, exports declined 31% to 27,330 units.

The Nifty FMCG index declined 4.30% over the week to 43,789.85. On 1 October, it fell 1.61%, with 13 of its 15 constituents declining. The index traded between 43,442.30 and 44,441.65 during the session.

The Nifty Bank declined 1.78% over the week to 54,450.75. Its 1 October range was 54,066.60–55,091.45. The BSE Bankex declined 2.17% over the week. Banking stocks faced pressure from the broader foreign selling and concerns about the effect of higher oil prices on inflation and interest rates.

The Nifty Realty fell 3.06%, closing at 835.00, while the Nifty Healthcare index declined 3.95% over the week to 16,095.55. The Nifty Midcap 150’s larger decline also reflected pressure across the wider universe of financial, consumer, industrial and healthcare companies.

IT Gains 0.34% as Rupee Weakness Helps

Information technology was the notable sector to resist the broader decline. The Nifty IT index gained 0.34% over the week and closed at 28,304.70 on 1 October. The index rose 2.17% during the final session, trading between 27,732.95 and 28,304.70.

The sector benefited from the weaker rupee because a significant portion of large IT companies’ revenue comes from overseas markets. On 1 October, Infosys rose 4.11% to ₹1,035, while TCS gained 1.19% to ₹2,075. Their gains helped limit the benchmark decline.

Pharma and metals provided temporary support on 29 September. Nifty Pharma rose 0.64%, while Nifty Metal gained 0.78% that day. Pharmaceutical stocks responded to news that the US had exempted certain Indian drugs from additional import tariffs. Tata Steel also gained 1.05% during the session.

India VIX Rises as Selling Becomes More Volatile

India VIX, the market’s volatility gauge, rose sharply during periods of heavy selling. On 28 September, India VIX increased by about 12.5% as the Nifty fell 1.56%. The move coincided with the sharp rise in crude prices and concerns over the US-Iran diplomatic impasse.

Volatility became particularly visible on 29 September, when the monthly derivatives expiry produced unusually sharp intraday movement. The Nifty’s indicative closing value briefly fell about 2.2% and touched 22,267 during the closing-auction period before recovering to finish at 22,716.20.

On 1 October, India VIX rose about 7.04% to 14.44, while the Nifty fell 0.88%. The relationship was again visible during the day’s sharp intraday decline, when the Nifty touched 22,217.30 before recovering.

Foreign Selling Reaches ₹34,966 Crore in Four Sessions

Foreign institutional selling remained one of the clearest domestic market pressures. Combined exchange data showed foreign institutional investors and foreign portfolio investors selling a net ₹5,353.22 crore on 28 September, ₹9,980.22 crore on 29 September, ₹10,148.41 crore on 30 September and ₹9,484.22 crore on 1 October. The combined weekly outflow was therefore approximately ₹34,966.07 crore.

Domestic institutional investors provided substantial counter-flow. DIIs bought a net ₹5,189.02 crore on 28 September, ₹6,952.71 crore on 29 September, ₹11,271.73 crore on 30 September and ₹10,041.84 crore on 1 October. Their combined net buying reached approximately ₹33,455.30 crore during the four sessions.

The data therefore showed strong domestic institutional buying alongside sustained foreign selling. Domestic purchases substantially offset the foreign supply in cash-market terms, although the major indices still declined during the week.

Rupee Slips as Brent Crude Stays Elevated

The rupee remained sensitive to crude oil and US Treasury yields. On 28 September, it closed at ₹95.9825 per US dollar, while Brent crude rose close to $108.20 a barrel. On 29 September, the rupee again approached ₹96, touching ₹96.1475 before closing at ₹95.98.

On 1 October, the rupee closed around ₹96.32 per dollar, compared with ₹95.82 previously. Higher US yields supported the dollar, while elevated oil prices increased India’s import-cost pressure.

US Treasury yields also remained elevated. The US 10-year yield moved above 5.27% on 29 September and touched about 5.293% on 30 September, its highest level since 2007 according to market reports. Higher US yields can affect global capital allocation and increase the relative pressure on emerging-market currencies and equities.

RBI Rate-Hike Expectations Add Domestic Pressure

The Reserve Bank of India became an important market focus during the week because inflation had broadened while economic growth remained strong. A Reuters economist poll published on 28 September showed around 60% of economists expecting a 25-basis-point repo-rate increase at the RBI’s October meeting, taking the rate from 5.25% to 5.50%.

The same reporting noted that India’s August inflation rate had reached 4.82%, above the RBI’s medium-term 4% target for a third consecutive month. Economic growth was also reported at nearly 8% for the April-June quarter, while bank-credit growth exceeded 19% in July.

The combination of higher crude prices, broader inflation and expectations surrounding the upcoming RBI meeting contributed to pressure on bond yields and interest-rate-sensitive sectors. The RBI itself did not announce a rate change during this reporting week; the policy meeting remained an upcoming event rather than a completed decision.

US Markets and Global Bonds Remain a Key External Trigger

Global bond markets remained central to Indian equity trading. On 28 September, US Treasury yields rose sharply as markets considered the possibility of further Federal Reserve tightening. The US 30-year yield reached its highest level since 2004, while the 10-year yield reached its highest level since 2007.

US equities also weakened on 28 September, with the S&P 500 falling 0.8%, the Nasdaq declining 0.9% and the Dow Jones losing 0.7%. Higher yields and higher energy costs created the principal pressure.

By 1 October, US equities had stabilised somewhat. The S&P 500 gained 0.2%, while the Dow and Nasdaq recorded smaller gains. European markets remained under pressure from bond-yield movements, while Asian markets were mixed.

The global backdrop therefore remained important for Indian equities through the transmission channels of crude prices, currency movements, foreign flows and global interest rates.

Power Mech Gains After ₹549 Crore Order

Power Mech Projects emerged as a notable company-specific development on 30 September after the company disclosed a ₹549.37 crore operation and maintenance order from Moxie Power Generation, an Adani Group company.

The contract covers complete operation and maintenance of a power-generation facility for 60 months, with execution scheduled from 1 October 2026 to 30 September 2031. The disclosed value includes taxes and duties but excludes Goods and Services Tax. The company stated that the awarding entity was not a related party and that its promoter, promoter group and group companies had no interest in the entity.

Power Mech shares rose 5.59% during 30 September trading and reached ₹2,531.50, compared with the previous close of ₹2,397.55.

Hero MotoCorp Reports 12% Sales Growth

Hero MotoCorp reported its September sales on 1 October. Total dispatches reached 7,66,348 units, representing 12% year-on-year growth from 6,87,220 units.

Domestic dispatches increased 14% to 7,39,018 units. Domestic internal-combustion-engine dispatches reached 7,10,436 units, while ICE scooter dispatches increased 60% year on year. VIDA dispatches reached 28,798 units, with VAHAN registrations for VIDA increasing 83%. Exports, however, fell 31% to 27,330 units.

The sales release arrived as the broader auto sector remained under pressure. The Nifty Auto index fell 3.46% on 1 October, while Bajaj Auto, Maruti Suzuki and Mahindra & Mahindra were among the major Nifty decliners.

Pharma Stocks Respond to US Tariff Exemptions

Pharmaceutical stocks received a sector-specific boost on 29 September after reports that certain Indian drugs received exemptions from additional US import tariffs. Nifty Pharma rose 0.64% during that session, while Sun Pharma gained 1.09%. Dr Reddy’s Laboratories and Mankind Pharma also moved higher during the session.

The sector’s strength did not persist through the full week. Nifty Healthcare declined 3.95% over the week, while Nifty Pharma also ended below its earlier levels after subsequent market-wide selling. The weekly movement therefore reflected the difference between a sector-specific development and the broader risk-off environment.

IPO Activity Remains High Despite Equity Weakness

The primary market remained active during the week. Several issues opened or closed while secondary-market benchmarks declined.

SRIT India and Shah Investor’s Home opened for subscription on 28 September and closed on 30 September. SRIT India’s issue carried a price band of ₹123–₹130 and an issue size of approximately ₹218.40 crore, while Shah Investor’s Home had a ₹159–₹167 price band and an issue size of about ₹90.17 crore.

Several SME issues also opened during the period, including Acme Universal Safezone 9, Pind Hospitality, Shivchem Agro, Unitec Fibres, Pooja Logistics and Coreintegra Consulting Services. Mainboard issues including Swastika Infra, Adroit Industries India, Elevate Campuses, Liqvd Digital India and ArMee Infotech also entered the market around the start of the week.

On 30 September, Vishal Nirmiti and Nityas Gems & Jewellery opened for subscription. Their issues were scheduled to remain open through 5 October, meaning their subscription activity extended beyond the reporting period.

The week also included scheduled listings of several issues, including Liqvd Digital India, ArMee Infotech, Elevate Campuses, Adroit Industries India, Swastika Infra, Pooja Logistics and Unitec Fibres on 30 September, while several issues that closed during the week were scheduled to list subsequently.

SEBI’s public-issue records also showed offer-document activity during the week, including filings involving Iris Global Services on 28 September, Ultravibrant Integrated Energy and Moneyview on 29 September, and several prospectus and draft-offer-document filings on 30 September and 1 October.

Derivatives Expiry Amplifies Intraday Swings

The monthly derivatives expiry on 29 September materially increased intraday volatility. The Nifty briefly fell more than 2% during the closing-auction process before recovering and finishing only 0.28% lower. Bank Nifty also experienced a sharp intraday decline of roughly 1,100 points before recovering part of the loss.

The derivatives data also showed continued foreign positioning in index futures. On 1 October, foreign institutions were net short in index futures, while their cash-market activity showed net selling of ₹9,484.22 crore.

The expiry-related movement therefore added a market-structure factor to the fundamental pressures created by crude oil, currencies, global yields and foreign equity flows.

Eight Weekly Declines Mark A 25-Year Streak

The final session confirmed the market’s eighth consecutive weekly decline. The Nifty ended the week at 22,421.95, down about 3% for the week according to market summaries, while the Sensex declined about 2.7%. The sequence represents the longest run of weekly declines for the benchmarks in approximately 25 years.

The decline was broad rather than concentrated in one sector. Auto, FMCG, realty, metals, healthcare and banking remained under pressure, while IT provided relative support during the final session. Mid-cap and small-cap indices also recorded declines exceeding the Nifty 50’s weekly fall.

The key developments during the period were therefore the renewed rise in crude oil, continuing foreign selling, elevated US Treasury yields, rupee weakness, expectations surrounding the October RBI policy meeting and the sharp derivatives-related volatility on 29 September. These factors operated alongside company-specific developments such as September auto sales and large order announcements. The week ended with Indian equities under pressure from higher crude prices, foreign selling, elevated global yields and currency weakness, while domestic institutional buying provided substantial counter-flow. 1 October was the final trading session because markets remained closed on 2 October for Gandhi Jayanti, with the Nifty closing at 22,421.95 and the Sensex at 71,909.70.