Market plunges, more bad weather may lie ahead

Opinion Market plunges, more bad weather may lie ahead Oil rates spiked after US President Donald Trump's rejection of a proposal from Iran to support reopen the Strait of Hormuz.

Key points

• 2 min readSep 29, 2026 06: 05 AM IST First published on: Sep 29, 2026 at 06: 05 AM IST.
• The BSE Sensex concluded the day down 1, 124 points or 1.52 per cent.
• Near-term movements will continue to be impacted by both global and domestic factors.
• This souring of sentiment can be traced to a number of factors.

On Monday, Indian markets saw a sharp selloff. The BSE Sensex concluded the day down 1, 124 points or 1.52 per cent. The weakness was broadbased, with the PSU bank, FMCG, utilities, auto and financial services indices ending the day in the red. Investors have been feeling the pain for some time now. Since the beginning of this year, the Sensex has fallen by almost 15 per cent.

This souring of sentiment can be traced to a number of factors. The conflict in West Asia and the consequent high energy rates weigh heavy. More lately, oil costs spiked after US President Donald Trump's rejection of a proposal from Iran to reopen the Strait of Hormuz. Alongside, rising bond yields in advanced economies – the 10-year US bond yield is at present at 5.2 per cent – and tightening of global financial conditions are complicating matters. Foreign investors have turned net sellers again. After $18.9 billion in 2025, in September, FPIs took out $2.1 billion from the equity markets, bringing outflows to $26.2 billion so far this year. This additionally suggests that investor worries run deeper. Analysts at Bernstein, a brokerage firm, have argued that the "case for a structural India allocation has become harder to make". All this comes against the backdrop of healthy corporate results. Though operating profit margins will continue to come under pressure, ratings agency ICRA expects India Inc's revenue expansion to range between 13 and 15 per cent in the second quarter of the current financial year.

Near-term movements will continue to be impacted by both global and domestic factors. After the US Fed's recent interest rate hike, markets will parse upcoming data for clues on the trajectory of interest rates, on the external front. Alongside, the duration and intensity of the conflict in West Asia and its implications for energy markets will continue to exert influence. On the domestic front, the impact of El Niño on crop output and the extent of policy tightening – the RBI's Monetary Policy Committee will meet next week against the backdrop of expectations of a rate hike – will have a bearing.

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Taken together, the developments around market plunges, more bad weather may lie ahead point to a situation that is still moving, and the coming days should bring more clarity.