Nifty 50 sinks to an 18-month low as rate fears bite

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A day after the central bank raised interest rates for the first time in more than three years, India's equity benchmark Nifty 50 plunged to an 18-month low on Thursday, breaching its previous 52-week trough amid a broad-based selloff.
The slide, into its ninth straight week now, has deepened concerns over further market losses, with surging oil prices threatening to keep inflation elevated, trigger more rate hikes and prolong the pain in the market.
The National Stock Exchange's Nifty 50 ended 1.64% lower at 22,231.80 on 8 October, its lowest closing level since 7 April 2025. The index had hit an intraday low of 22,179, a tad below its previous 52-week low of 22,182.
The Nifty 50 is now 15.7% lower than its 52-week high.
The BSE's Sensex 30 closed 1.44% down at 71,593.24, its lowest level since 13 February 2024.
Foreign portfolio investors' (FPI) selling in the index heavyweights dragged down the index.
GQG Partners Emerging Markets Equity and Goldman Sachs Trust II Goldman Sachs GQG Partners Intl Opportunities Fund sold ₹1,839 crore and ₹6,831 crore, respectively, in ITC through a bulk deal on the BSE. ITC shares fell 4.03%. Its shares were mostly lapped up by mutual funds in the block deal. ICICI Prudential AMC, SBI MF and others participated in the block deal. While GQG Partners Emerging Markets Equity FD A Series of GQG Partner Series LLC also sold shares worth ₹9,395 crore in a block deal on the BSE.
FPIs net sold shares worth ₹12,943 crore on Thursday, per provisional data by the BSE, their highest selling on a single day since 29 May.
Rising global bond yields are prompting foreign institutional investors (FIIs) to move to safer assets and ditch riskier assets such as emerging market equities. In September and October so far, FIIs have net sold shares worth ₹57,979 crore, per National Securities Depository Ltd (NDSL) data.
Due to relentless FPI selling, for the first time in over 10 years, HDFC Bank, an index heavyweight, saw its domestic institutional investor (DII) shareholding top that of FIIs. Its FII shareholding fell to 39.39% in the September quarter from 41.82% in the previous quarter. DII shareholding in the September quarter rose to 43.44%.
The Nifty 50’s breach of its previous 52-week low, recorded on 7 April 2025, signals mounting selling pressure and raises the risk of a deeper market downturn.
Interest rate-sensitive sectors pulled down the index, with Nifty Realty down 3.16%, Nifty Auto 2.49% lower, and the Nifty consumption index down 2.15%.
The biggest risk is crude oil staying higher for longer amid the ongoing West Asia war, which could keep imported inflation elevated, said Sunny Agrawal, head of fundamental research at SBI Securities. If domestic supply-side challenges emerge, core inflation could inch up, potentially weighing on demand, particularly at the lower end of the pyramid, he said.
Brent crude surged 4.8% to $104 a barrel on Thursday amid geopolitical uncertainties.
Although Nifty 50’s one-year return is down around 11.24%, Kalpen Parekh, managing director and chief executive officer at DSP Mutual Fund, said the Indian economy is doing fine.
Auto and cement sales are rising, power demand is steady, and there is spare capacity in the economy, he said, adding that these trends suggest domestic demand is healthy without an excessive pricing pressure.
“The key risks are a sharp rise in global interest rates or oil prices, particularly if the Middle East conflict escalates. Otherwise, valuations have already come closer to fair value in banks, insurance companies, tech, and others,” Parekh added.
The Reserve Bank of India's monetary policy committee (MPC) on Wednesday hiked the repo rate by 25 basis points to 5.50%, and shifted its policy stance from ‘neutral’ to ‘calibrated tightening’, indicating further policy moves would be limited to a rate hike or a pause, depending on how economic conditions evolve.
The selloff was broad-based, with the Nifty Smallcap 250 index closing 2.4% down and the Nifty Midcap 150 ending 2.53% lower. Barring three stocks, the remaining 47 in the index closed in the red.
The BSE market capitalization fell by ₹9.96 lakh crore on Thursday.
(Dipti Sharma contributed to this story.)
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