Indian Markets Extend Losses for Fourth Day, Rupee Weakens Past 96; RBI's New Deposit Rules Kick In

Key highlights

• Sensex: Closed down 570.59 points (0.79%) at 71,909.70, extending its losing streak to four sessions.
• Nifty 50: Declined 198.50 points (0.88%) to 22,421.95, with broader markets also witnessing significant pressure.
• Indian Rupee: Weakened past 96 against the US Dollar, trading around 96.10, influenced by rising US yields and FII selling.
• Crude Oil: Brent crude futures remained elevated around $98.15 per barrel, contributing to inflation concerns and import bill pressure.
• India VIX: Spiked over 12% to 15.15, signaling increased market volatility and investor anxiety.

Indian Markets Plunge for Fourth Consecutive Session Amid Global Headwinds

Indian equity benchmarks, Sensex and Nifty, experienced a significant sell-off on Thursday, marking their fourth consecutive session of declines. The 30-share BSE Sensex plummeted 570.59 points, or 0.79%, to close at 71,909.70, while the broader NSE Nifty 50 fell 198.50 points, or 0.88%, settling at 22,421.95. This downturn was broad-based, with the Nifty Midcap and Smallcap indices also trading lower, reflecting a pervasive risk-off sentiment across the market.

The primary catalysts for this sustained market pressure are a confluence of global and domestic factors. Persistent outflows by Foreign Institutional Investors (FIIs) have been a major drag, with FIIs offloading equities worth ₹10,148.41 crore on Wednesday alone, and continuous selling observed over recent sessions. This selling pressure is exacerbated by the appeal of higher returns in the United States, where 10-year US Treasury yields have surged to nearly 5.31%, reaching a two-decade high. Such elevated yields diminish the attractiveness of emerging market assets like Indian equities.

Furthermore, the elevated prices of crude oil, with Brent crude futures hovering around $98.15 per barrel, continue to fuel concerns over India's import bill, inflation trajectory, and the weakening Rupee. Geopolitical tensions in West Asia are also contributing to the uncertainty, keeping oil prices firm. The India VIX, a measure of market volatility, spiked over 12% to 15.15, indicating rising investor anxiety. While some banking and IT stocks like HDFC Bank and Infosys showed resilience, the overall market breadth was negative, with sectors like Auto, Metal, and Realty experiencing significant declines.

Rupee Breaches 96 Mark Against US Dollar on Strong Global Cues

The Indian Rupee (INR) continued its downward trajectory against the US Dollar (USD) on Thursday, weakening past the crucial 96 level. The currency was trading around 96.10 against the greenback in afternoon trade, having opened 15 paise weaker at 95.98 compared to its previous close. This depreciation marks a significant move, driven by a combination of global financial dynamics and domestic market pressures.

The primary factor contributing to the Rupee's weakness is the relentless rise in US Treasury yields. The 10-year US Treasury yield has climbed to approximately 5.31%, its highest level in nearly two decades. This makes dollar-denominated assets more attractive to global investors, leading to capital outflows from emerging markets, including India. Persistent selling by Foreign Institutional Investors (FIIs) in the Indian equity markets further fuels the demand for dollars, putting additional pressure on the Rupee.

Adding to the pressure is the sustained demand for US Dollars from state-run oil companies, which require the foreign currency to fund India's substantial crude oil imports. With Brent crude prices remaining elevated near $98.15 per barrel, the import bill remains high, necessitating continuous dollar purchases. Despite interventions by the Reserve Bank of India (RBI) through dollar sales in both spot and forward markets, the Rupee has struggled to hold its ground against the strengthening dollar. The weakening Rupee has implications for India's import costs and could contribute to inflationary pressures.

More stocks and market news

RBI's New Bulk Deposit Rules Come into Effect

New regulations from the Reserve Bank of India (RBI) concerning fixed deposits of ₹3 crore and above became effective from October 1, 2026. These amended directions primarily aim to enhance transparency in the pricing and disclosure of bulk fixed deposits. Under the new framework, banks are now mandated to publish the interest rates applicable to bulk deposits on their websites every working day by 10 AM, with a small window for updates. This move is intended to provide large depositors, including high-net-worth individuals, companies, and institutions, with clear and upfront information on rates, reducing uncertainty and promoting fair pricing. The changes do not significantly impact most retail fixed deposit holders with deposits below ₹3 crore.

NSE Receives SEBI Nod for Corporate Bond Index Futures

The National Stock Exchange of India (NSE) has secured a No Objection Certificate (NOC) from the Securities and Exchange Board of India (SEBI) for its proposal to introduce futures contracts on a Corporate Bond Index. This development is a significant step towards deepening India's fixed income markets. The proposed Corporate Bond Index Futures are designed to offer market participants an exchange-traded instrument for managing corporate bond market risk, facilitating better risk management, portfolio hedging, and price discovery. While SEBI's approval marks a crucial milestone, the introduction of these futures contracts is still contingent upon receiving the necessary approval from the Reserve Bank of India (RBI).

A-One Steels IPO Debuts with 12.35% Premium

A-One Steels made a strong debut on the stock exchanges today, with its shares listing at ₹455 on both NSE and BSE. This represents a premium of ₹50, or 12.35%, over its initial public offering (IPO) issue price of ₹405 per share. The successful listing comes after the company's ₹405 crore IPO received an overall subscription of 12.23 times during its bidding period from September 24-28. This positive market reception for A-One Steels contrasts with the broader market's bearish sentiment and indicates continued investor appetite for new listings with strong fundamentals. Meanwhile, allotment for SRIT India and Shah Investor's Home IPOs was also expected today, and Vishal Nirmiti IPO entered its second day of bidding.

Market context

Indian benchmark indices closed sharply lower, with the Sensex down 0.79% at 71,909.70 and the Nifty 50 down 0.88% at 22,421.95. The Nifty Bank index also declined, while the India VIX surged over 12% to 15.15, reflecting heightened volatility. Globally, markets presented a mixed picture, with US futures showing some gains but Asian markets largely cautious. Brent crude oil prices remained elevated at $98.15 per barrel, and the Indian Rupee weakened to approximately 96.10 against the US Dollar.

Why these stories matter

The sustained market sell-off highlights the vulnerability of Indian equities to global macroeconomic factors, particularly the impact of rising US interest rates and persistent FII outflows on capital flows. The weakening Rupee directly affects India's import costs, potentially fueling inflation and impacting corporate earnings, especially for companies reliant on imports. The new RBI rules for bulk deposits signify a move towards greater transparency and regulatory oversight in the banking sector, while SEBI's nod for corporate bond index futures is a crucial step in developing more sophisticated risk management tools for India's fixed income market. The successful IPO listing, despite market weakness, indicates selective investor confidence in new offerings.

What to watch next

• Global Central Bank Actions: Further statements or actions from the US Federal Reserve regarding interest rates will be closely watched for their impact on global liquidity and FII flows.
• Crude Oil Price Movement: Continued monitoring of geopolitical developments in West Asia and their effect on international crude oil prices.
• Q2 Earnings Season: Upcoming quarterly earnings announcements from Indian companies will provide insights into corporate performance amidst current economic conditions.
• RBI's Monetary Policy Stance: Any indications from the RBI regarding its stance on inflation and potential policy responses to liquidity and currency movements.
• IPO Listings: Upcoming listings of SRIT India and Shah Investor's Home will be watched for investor sentiment in the primary market.

Sources

• The Times of India: Stock Market Today Live Updates: Sensex drops 570.59 points at closing; Nifty tanks to 22,421.95
• NDTV: Stock Market Highlights, Sensex Today: Sensex Closes 570 Points Lower Amid Heavy Selling, High Oil Prices
• Mitrade: Indian Rupee falls as US Treasury Yields hit fresh two-decade high near 5.3%
• BusinessToday: New RBI FD rules from Oct 1: Who will see changes and why most retail FD holders need not worry
• The Tribune: NSE gets SEBI nod for proposed Corporate Bond Index Futures

FAQ

1. Why did the Indian stock market fall today?

The Indian stock market fell today primarily due to persistent selling by Foreign Institutional Investors (FIIs), rising US Treasury yields which make dollar assets more attractive, elevated crude oil prices, and ongoing geopolitical tensions in West Asia.

2. What caused the Rupee to weaken against the US Dollar?

The Rupee weakened past 96 against the US Dollar mainly because of surging US Treasury yields, which led to FII outflows from India, and strong dollar demand from state-run oil companies for crude imports.

3. What are the new RBI rules for fixed deposits from October 1, 2026?

From October 1, 2026, new RBI rules mandate greater transparency for bulk fixed deposits of ₹3 crore and above. Banks must now publish the interest rates for these deposits on their websites daily by 10 AM.

4. What is the significance of SEBI's NOC for Corporate Bond Index Futures?

SEBI's No Objection Certificate to NSE for Corporate Bond Index Futures is a significant step towards developing India's fixed income markets. It aims to provide market participants with a new tool for managing corporate bond risk, hedging portfolios, and improving price discovery, pending RBI approval.

5. How did IPOs perform amidst the market downturn today?

Despite the broader market downturn, A-One Steels IPO listed successfully at a 12.35% premium over its issue price, indicating selective investor confidence in new offerings. Allotment for other IPOs like SRIT India and Shah Investor's Home was also expected today.

Disclaimer: This article is for educational purposes only. It does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.