Sensex and Nifty Plunge for Eighth Straight Week in Historic 25-Year Downturn as Rupee Falters

Indian equity markets marked an eighth consecutive weekly decline on Thursday, October 1, sealing their longest losing streak in 25 years. The persistent drop—the first eight-week string of weekly losses since 2001—was triggered by heavy foreign capital outflows, crude oil breaking above $100 per barrel, and multi-decade highs in US Treasury yields.

The holiday-truncated week, which ended ahead of the Gandhi Jayanti market holiday on October 2, saw the benchmark 30-share BSE Sensex fall 570.59 points, or 0.79%, on Thursday to settle at 71,909.70, after tumbling to an intraday low of 71,292.88. This marked the Sensex's lowest closing level in 28 months, breaching the key 72,000 threshold. The NSE Nifty 50 dropped 198.50 points, or 0.88%, to finish at 22,421.95.

Across the week, the Sensex dropped 2.69% and the Nifty shed 3.11%. Over the entire eight-week slump, the Nifty 50 has surrendered 8.7%, while the Sensex has fallen 8.4%.

Wealth Erosion and Rupee Pressures

The extended market slide wiped out approximately ₹15 lakh crore in investor wealth over the week, pulling the overall market capitalisation of BSE-listed companies down from ₹481.9 lakh crore to ₹467 lakh crore.

Compounding equity losses, the Indian rupee fell under intensified strain, depreciating by 50 paise against the US dollar. Currency weakness followed a sharp rise in the US 10-year Treasury yield, which touched 5.34%—its highest reading since 2002. The widening yield differential between US fixed income and domestic assets prompted investors to shift toward dollar-denominated securities, adding sustained depreciation pressure on the rupee.

Foreign Capital Flight and Macro Headwinds

Foreign portfolio investors (FPIs) stepped up their liquidations, dumping shares worth ₹10,148 crore on Wednesday and another ₹9,160 crore on Thursday. Total net foreign outflows from Indian equities for the year reached $27.8 billion.

Key Factors Driving the 8-Week Rout:

• Elevated Crude Oil: Brent crude pushed back above $100 per barrel to trade near $100.70, heightening imported inflation risks and widening India's current account deficit.
• US Bond Yield Surge: A persistent global bond sell-off pushed US Treasury yields to 24-year peaks, lowering the appeal of emerging market equities.
• Aggressive FPI Exits: Persistent foreign institutional selling continued to outweigh domestic institutional support.
• Currency Depreciation: A weakening rupee exacerbated input costs for import-dependent sectors, dampening margin outlooks.

Sectoral Trends and Broader Market Performance

Broader indices experienced aggressive selling during the week. The BSE Midcap index dropped 3.65%—its worst weekly slump since mid-March—while the BSE Smallcap index shed 2.64%.

On a sectoral basis, auto and healthcare bore the brunt of the downturn. In contrast, the Nifty IT index bucked the broader market decline, advancing more than 2% during Thursday's session, supported in part by the depreciating rupee, which typically aids margins for export-focused software services firms.

Investor Outlook and RBI Policy

Market participants are turning their attention to the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting. Analysts note that with the earnings yield on the Nifty dropping relative to sovereign debt yields, equities are likely to remain range-bound or under pressure until foreign liquidations ease and global energy prices moderate.

Tags: BSE Sensex NSE Nifty 50 Reserve Bank of India Nifty IT Nifty Auto Foreign Portfolio Investors