Indian equity markets suffered a sharp sell-off on Thursday, with the Sensex plunging 1,045 points and the Nifty falling 371 points by the close as investors reacted to the Reserve Bank of India’s more hawkish policy stance and a surge in crude oil prices.
The BSE Sensex settled at 71,593.24, down 1,045.46 points, while the Nifty 50 ended at 22,231.80, marking an 18-month low. The sell-off came a day after the RBI raised its repo rate by 25 basis points to 5.5 per cent and shifted its stance from “neutral” to “calibrated tightening”.
Markets slide further through the day
The benchmarks opened only moderately lower on Thursday. The Sensex fell about 150 points at the open, while the Nifty declined around 70 points.
Selling pressure intensified as the session progressed. By 2.50pm, the Sensex had fallen 1,120 points and the Nifty was down 387 points. The indices recovered slightly before the close but remained firmly in negative territory.
The Nifty's close at 22,231.80 was its lowest level since April 2025, while the Sensex fell to its lowest level in 32 months. All 16 major sectoral indices declined, with small and mid-cap stocks also coming under heavy pressure.
Crude crosses $104 amid Middle East concerns
A major source of pressure was the sharp rise in crude oil prices. Brent crude gained 3.9 per cent to an intraday high of $104.09 a barrel as concerns over supplies from the Middle East persisted.
Oil prices have remained above the $100 mark amid escalating geopolitical tensions and concerns over disruptions to regional supplies. For India, one of the world's largest oil importers, higher crude prices raise concerns over inflation, the current account and the rupee.
The rupee also remained weak, trading close to its record low at around ₹96.80 to the US dollar during the session.
RBI tightening weighs on investor sentiment
The market sell-off followed the RBI's decision on Wednesday to raise its benchmark repo rate by 25 basis points to 5.5 per cent, its first rate increase in nearly four years.
The central bank also moved its monetary policy stance from “neutral” to “calibrated tightening”, signalling that further action could be considered if inflationary pressures persist. RBI Governor Sanjay Malhotra indicated that near-term rate cuts were no longer on the table, with future decisions dependent on economic conditions.
The move has heightened concerns among investors that tighter monetary conditions could weigh on borrowing, consumption and corporate earnings.
Foreign selling adds to pressure
The market decline was compounded by sustained selling by foreign investors. Foreign institutional investors sold ₹6,121.40 crore of Indian equities in the previous session, while domestic institutional investors remained buyers.
Foreign investors have been retreating from Indian equities amid higher oil prices, a weaker rupee, elevated global bond yields and expectations of further monetary tightening. Reuters reported that foreign investors had recorded nearly $30.4 billion in net outflows from Indian equities so far this year.
The combination of tighter domestic monetary policy, expensive crude, foreign fund outflows and global uncertainty has therefore intensified pressure on Indian benchmarks.
The sharp fall on Thursday followed a weaker session on Wednesday, when the Sensex declined 429 points and the Nifty fell 173 points after the RBI's rate decision.