Market Today: Nifty down 295 points, Sensex down 850 points; 7 Reasons explained

The Indian stock market has experienced a significant fall today, with both the Nifty 50 and Sensex showing a considerable decline. Investors and traders are closely watching the evolving global and domestic market conditions as they try to understand the reasons behind this Bearish market.

In today’s session, both indices opened with a negative sentiment, reflecting bearish views from the start. As trading continued, selling pressure increased, causing a further decline in the indices. This led to a sharp intraday fall for both the Sensex and Nifty, highlighting the negative sentiment among market participants.

Index Overview  

The Nifty Index opened at 26,159.80, marking a gap-down opening from its previous close of 26,186.45, and fell by nearly 295 points (1.13%) from the previous close. Meanwhile, the Sensex Index opened at 85,624.84, representing a gap-down from its previous close of 85,712.37, and has declined by more than 850 points (almost 1%) from the previous close.

Here are the reasons for the fall:

Caution ahead of the US Fed meet

Investors adopted a cautious stance ahead of the U.S. Federal Reserve’s two-day meeting starting December 9. Market participants are treading carefully ahead of the FOMC meeting, upcoming inflation data, and year-end portfolio rebalancing,” said Devarsh Vakil, Head of Prime Research at HDFC Securities. He noted that central banks in Australia, Brazil, Canada, and Switzerland are also set to meet this week, though no policy shifts are anticipated from them apart from the Fed.

Heavy selling in small and midcap shares

Small- and mid-cap stocks saw sharp profit-booking on Monday, with the Nifty Smallcap100 falling over 2% intraday, its fifth straight decline, and the Nifty Midcap100 slipping about 2%. Analysts said the sell-off, initially limited to smaller stocks, has begun spilling into large caps as well. 

According to market experts, it was a “de-beta” day marked by heavier pressure on broader markets, rising volatility, foreign outflows, and traders reducing risk ahead of a key global rate decision. Crowded sectors like defence electronics, renewables, and smaller industrials saw steep unwinding, driven more by positioning and global cues than domestic fundamentals.

Persistent FII outflows

Foreign institutional investors continued their selling for a seventh straight session, offloading Rs. 438.90 crore on Friday. Analysts attributed the pressure to global uncertainty around rate-cut timelines, weakness in Asian markets, and stretched valuations after a strong rally. Analyst noted that mid- and small-cap segments were hit harder since they had run up faster and typically react more sharply during phases of liquidity tightening or profit-booking.

Escalating Thailand & Cambodia War

Thailand launched airstrikes on Cambodia after a border clash, while Cambodia denied starting the fight and accused Thailand of provoking it. The violence threatens a recent US-led peace deal and has forced civilians on both sides to flee.

Weak rupee

The rupee slipped 16 paise to 90.11 against the US dollar, pressured by higher crude prices and sustained foreign outflows. It opened at 90.07 before weakening further due to strong dollar demand from corporates, importers, and FPIs.

Crude rises

Brent crude edged up 0.13% to USD 63.83 per barrel. Rising oil prices increase India’s import costs and inflation risks, often prompting caution in the equity markets.

India VIX up

India VIX climbed 2.11% to 10.53, signaling higher market uncertainty and prompting traders to pare back risk.

Written By Sridhar J

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