Sensex, Nifty Fall Sharply as Crude Oil Spikes and IT Stocks Decline Ahead of Fed Decision

Market benchmarks extend intraday losses

Indian equity benchmarks fell sharply on Wednesday, with the BSE Sensex hitting an intraday low of 72,603, down 995 points or 1.35 per cent. The Nifty 50 index dropped to an intraday low of 22,497, a decline of 252 points or 1.11 per cent. By 10:45 AM, the Sensex was trading at 72,810, down 787 points or 1.07 per cent, while the Nifty 50 stood at 22,575, down 199 points or 0.81 per cent. Both indices remained near their session lows at that time.

Crude oil, IT losses, and Federal Reserve caution drive the decline

The sell-off was led by information technology stocks, higher crude oil prices, and caution ahead of the US Federal Reserve's policy decision. Brent crude futures rose 1.45 per cent to $115.5 a barrel after an attack on a refinery in Saudi Arabia renewed concerns about supply risks in West Asia. US West Texas Intermediate crude climbed 1.49 per cent to $101.4.

The Nifty IT index fell 3.5 per cent amid renewed concerns about artificial intelligence's impact on the sector, following Microsoft's announcement of a steep workforce reduction. Only the Nifty Auto and Nifty Pharma indices traded in positive territory. Other sectoral indices fell as much as 3.5 per cent, led by Nifty IT, Nifty Oil & Gas, and Nifty FMCG. Broader market indices showed resilience and traded on a mixed note.

Geopolitical tension and foreign investor outflows add pressure

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the market has turned decisively weak amid reports of possible renewed US strikes on Iran after the US mid-term elections. He noted that Brent crude remaining above $115 is bad news for the Indian economy and markets. According to Vijayakumar, two conditions are necessary for a revival: crude prices must decline, and foreign portfolio investors must stop selling and turn buyers. He suggested changes to the long-term capital gains tax appear inevitable, citing FPI outflows of $19 billion in 2025 and $31 billion so far this year.

Foreign institutional investors have been net sellers for ten straight weeks. In October so far, FIIs sold a net ₹514.66 billion, while domestic institutional investors bought a net ₹591.10 billion. Rising US bond yields, with the 10-year yield around 5.42 per cent, could make US assets more attractive and add pressure on Indian equities.

Broader economic cues investors are watching

Market participants are awaiting the US Federal Reserve's policy decision, along with the Bank of Japan's rate decision later in the week and US GDP data. Thomas Priju, Portfolio Manager at Karma Capital, cited by Bajaj Broking, said the expectation is that the Fed will keep rates unchanged in October, with attention on its commentary and the possibility of further tightening in December. Ponmudi R, CEO of Enrich Money, said investors are tracking global markets and energy prices, with sustained cost pressures and the broader economic outlook in focus.

Practical implications for investors

The session underscores how quickly Indian benchmarks can react to external variables: energy prices, US monetary policy, geopolitical developments, and foreign capital flows. For equity investors, the concentration of losses in IT, oil and gas, and FMCG suggests sector-specific risks are compounding broader macro caution. The fact that auto and pharma held gains while broader indices were mixed indicates the sell-off was not uniform across the market. Readers should note that analyst views cited in the report are not investment advice, and the source explicitly states these views do not reflect Business Standard's position.

Confirmed versus unknown

Confirmed: Sensex and Nifty 50 intraday lows and point declines; sectoral performance; crude oil price movements; FII and DII October flow figures; the timing of upcoming central bank decisions.

Unknown: Whether crude prices will decline, whether FPIs will reverse selling, whether LTCG tax changes will be announced, the outcome of the Fed meeting, and whether the market weakness will persist beyond the session.

How readers can check the original announcement

The full report, including analyst commentary and market data, is available on Business Standard's website at https://www.business-standard.com/markets/news/market-fall-explained-sensex-dives-995-points-intraday-nifty-at-22-500-126102800393_1.html. Readers can review the disclaimer there noting that views belong to the cited brokerages and analysts.