Sensex and Nifty Slide Sharply; Foreign Fund Selling, Global Uncertainty Drag Markets

Indian equity markets witnessed a steep decline today as both the Sensex and Nifty extended recent losses, driven by a mix of foreign fund outflows, weak global cues and domestic risk‑aversion. The downturn was broad‑based, with banking, metal, IT and mid‑cap stocks among the hardest hit.

The Sensex dropped over 700 points, while the Nifty fell below the 25,800 mark. The slide follows heavy selling pressure from foreign institutional investors (FIIs), who continued to withdraw money from Indian equities — a trend that deepened market stress. This sustained foreign outflow weighed on investor sentiment and triggered widespread profit‑taking, especially in small‑ and mid‑cap stocks.

Adding to the unease were global concerns ahead of a key policy decision by the U.S. Federal Reserve later this week. Uncertainty over U.S. interest‑rate policy, along with weak performance in global markets, dampened the risk appetite for emerging‑market assets like Indian equities. The rising yields in foreign bond markets, coupled with volatility in global equity indices, made investors increasingly cautious.

On the domestic front, the sliding rupee and inflationary pressures added to the uncertainty. Currency depreciation increases the cost of imports and puts pressure on companies with dollar‑linked expenses, a factor that further dampened confidence. Meanwhile, sectors that are sensitive to interest rates — including banking and realty — bore the brunt of the sell‑off.

Market breadth turned negative, with mid‑ and small‑cap stocks underperforming bigger peers, reflecting a broad withdrawal of capital. Analysts say the combination of foreign outflows, global policy uncertainty, currency headwinds and domestic risk concerns has created a precarious environment for equities — at least in the near term.

While India’s economic fundamentals remain largely intact, including healthy growth prospects, the near‑term outlook is clouded by external headwinds and capital‑flow volatility. For now, traders and investors appear cautious, preferring a wait‑and‑watch approach until global uncertainties ease and foreign investors possibly return.