Indian Stock Market Faces Historic Decline Amid Global Economic Pressures

The Indian stock market is grappling with its longest losing streak in 25 years, driven by record foreign selling and soaring crude oil prices. With the Nifty 50 and BSE Sensex experiencing significant declines, experts predict a challenging road ahead for investors. As the Reserve Bank of India prepares for a potential interest rate hike, concerns about inflation and economic growth loom large. Discover the factors contributing to this historic downturn and what it means for the future of Indian equities.

By Narendra Chaudhary Oct 1, 2026, 22:05 IST

Mumbai's Market Struggles Continue

Mumbai: The Indian stock market has experienced its longest losing streak in 25 years, with benchmark indices suffering their eighth consecutive weekly decline. This downturn is attributed to unprecedented foreign selling, crude oil prices nearing $100 per barrel, and rising global yields, which have significantly dampened investor sentiment.

During the shortened trading week, the Nifty 50 index fell by 3.1%, while the BSE Sensex decreased by 2.7%. Over the past eight weeks, these indices have lost 8.7% and 8.4%, respectively, marking their most significant weekly drops in over six and four months. The markets will be closed on Friday due to a local holiday. Prasenjit Paul, head equity analyst at Paul Asset and fund manager at 129 Wealth Fund, commented, “We are very close to the bottom. I do not expect another 10% fall from here, but neither do I see a sharp recovery in the next three to four months.”

This year, foreign outflows have reached a staggering $27.8 billion, while Brent crude prices remain elevated above $100 per barrel. Additionally, the US 10-year Treasury yield has surged to its highest level since mid-June 2007, making Indian equities less appealing to foreign investors. Paul noted that until foreign capital returns and crude prices stabilize, the Reserve Bank of India may struggle to support economic growth, as high oil prices could reignite inflationary pressures.

According to a Reuters poll of economists, the RBI is anticipated to increase interest rates by 25 basis points to 5.50% on October 7, marking its first rate hike since 2023. Out of 16 major sectors, 15 reported weekly losses, with small-cap and mid-cap stocks declining by 3.4% and 3.6%, respectively.

The auto sector saw a significant drop of 5.9%, while consumer durables fell by 6.2% this week, driven by concerns over demand and spending due to a weak monsoon. On the last trading day, the Nifty 50 decreased by 0.88% to 22,421.95, and the Sensex fell by 0.79% to 71,909.70. In contrast, the IT sector rose by 2.2% on the day and was the only sector to record weekly gains, up 0.5%, following slower-than-expected US inflation data that reduced the likelihood of further rate hikes.