BY Our Business Correspondent
Indian equity markets extended their decline for a second straight session on Thursday, with the benchmark Nifty 50 slipping below the psychologically important 24,100 level as selling in heavyweight stocks intensified. The Sensex suffered a sharper fall, declining more than 539 points, as investors turned cautious amid monthly expiry-related volatility, profit booking and uncertainty over global interest rates.
The S&P BSE Sensex fell 539.35 points, or 0.70%, to 76,933.59, while the Nifty 50 declined 116.90 points, or 0.48%, to 24,090.85. The latest fall took the two-session losses in the Sensex and Nifty to about 0.93% and 1%, respectively. The closing figures are consistent with independent market reports on Thursday’s trading session.
The selling came despite continued institutional support. Foreign institutional investors were provisional net buyers of about Rs 502.63 crore on August 26, while domestic institutional investors bought equities worth approximately Rs 6,425.16 crore, indicating that domestic liquidity remained a significant cushion for the market.
Heavyweights drag benchmarks lower
The principal pressure on the Nifty came from large-cap stocks, which have an outsized influence on the index. HDFC Bank declined 2.23%, Bharti Airtel fell 1.25% and Reliance Industries shed 1.22%, emerging as some of the biggest drags on the benchmark.
The weakness in heavyweight counters is significant because the broader market did not experience a comparable degree of selling. The BSE 150 MidCap Index declined 0.38%, while the BSE 250 SmallCap Index slipped just 0.04%. This relative resilience suggests that Thursday’s decline was concentrated to a considerable extent in large-cap and index-heavy shares rather than representing an indiscriminate liquidation across the market.
Market breadth, nevertheless, remained weak. On the BSE, 1,824 shares advanced, while 2,491 declined and 211 remained unchanged. The negative breadth indicated that selling pressure was reasonably widespread even though the broader indices outperformed the frontline benchmarks.
The India VIX, which measures the market’s expectation of near-term volatility, rose 5.06% to 11.10. The increase underlined the cautious tone prevailing around the expiry session and indicated that traders were assigning greater importance to short-term risk.
Expiry, profit booking and global concerns
Thursday’s decline reflected a combination of domestic and international factors. The monthly expiry of Sensex-linked derivatives added to intraday volatility as traders adjusted positions and squared off contracts. Expiry sessions can often produce sharper moves because of changes in open interest, hedging activity and rapid position adjustments.
The market was also dealing with profit booking after recent bouts of volatility. Investors have remained sensitive to global developments, particularly the outlook for US monetary policy. The latest US inflation data did little to ease those concerns.
The US Bureau of Economic Analysis reported that the Personal Consumption Expenditures price index rose 3.7% year-on-year in July, unchanged from June and above the 3.6% expectation. The index increased 0.2% from the previous month. Core PCE inflation, which excludes food and energy, rose 3.3% annually and 0.2% monthly.
For global investors, the significance of the report lies in the fact that PCE inflation is the Federal Reserve’s preferred inflation gauge. Inflation remaining well above the Fed’s 2% target complicates expectations about the future direction of US monetary policy and can keep global bond yields elevated.
Oil provides some relief
Crude oil prices offered a partial counterweight to the negative sentiment. Brent crude for October 2026 delivery gained 27 cents, or 0.31%, to $87.21 a barrel according to market data.
The oil market has remained particularly sensitive to developments surrounding the Middle East and the Strait of Hormuz, a critical route for global energy shipments. Any progress in negotiations that could reduce the risk of supply disruption could help moderate the risk premium embedded in crude prices.
For India, a sustained moderation in crude prices would generally be positive because the country remains heavily dependent on imported energy. Lower oil prices can reduce pressure on the import bill, inflation, corporate input costs and the current-account balance. However, Thursday’s market action showed that oil-related relief was insufficient to offset selling in heavyweight equities.
Rupee weakens; bond yields rise
The rupee also remained under pressure. The partially convertible rupee was hovering around 95.5500 against the US dollar, compared with the previous close of 95.4400.
A weaker rupee can create mixed implications for Indian companies. Export-oriented businesses may benefit from improved realisations, while companies dependent on imported crude, machinery, components or other commodities face higher costs.
The movement in the domestic bond market also reflected a cautious macro backdrop. The yield on India’s benchmark 10-year government security rose to 6.884% from 6.851%, an increase of 0.48% on the quoted basis.
In commodities, MCX Gold futures for October 5, 2026 delivery declined 0.70% to Rs 1,58,550. The US Dollar Index gained 0.06% to 99.14, while the US 10-year Treasury yield rose to 4.673%.
Higher US Treasury yields and a firmer dollar can influence emerging-market flows because global investors compare the relative returns available across developed and emerging markets. This remains an important variable for Indian equities, particularly when valuations are elevated.
Asian technology optimism fails to lift Indian markets
Global markets presented a mixed picture. Most Asian markets finished higher, supported by technology stocks after Nvidia delivered another strong earnings report, while European equities were largely lower.
Nvidia reported second-quarter fiscal 2027 revenue of $96.2 billion, up 106% from a year earlier, with data-centre revenue reaching $89 billion, an increase of 117%. Non-GAAP earnings were $2.22 per diluted share.
The semiconductor giant’s results reinforced the strength of global artificial-intelligence infrastructure spending. Nvidia also issued a strong revenue outlook for the following quarter, helping sustain optimism around AI-related technology companies.
However, the positive global technology signal failed to translate into a broad rally in Indian equities. This divergence underlined the importance of domestic factors—including expiry positioning, stock-specific selling and concerns surrounding large-cap valuations—in determining the day’s direction.
Wall Street had closed marginally lower on Wednesday. The Dow Jones Industrial Average declined 0.21%, the S&P 500 fell 0.02% and the Nasdaq Composite slipped 0.08% as investors weighed persistent US inflation against Nvidia’s earnings.
Bank of Korea tightens policy
Another important global development came from South Korea, where the Bank of Korea raised its benchmark interest rate by 25 basis points to 3.00%, marking a second consecutive rate increase. The move reflected persistent inflation pressures, stronger-than-expected growth and financial-stability concerns.
The BOK also sharply upgraded its 2026 growth forecast to 3.3% from 2.6% previously, while its stronger growth outlook was supported by exports, domestic demand and the global semiconductor cycle.
The decision is relevant for international investors because it shows that inflationary pressures remain a policy challenge even in economies benefiting from strong technology and semiconductor demand.
Meanwhile, China’s industrial profits rose 11.2% year-on-year in July, the slowest pace of growth this year, while profits for the first seven months increased 17.6%. The moderation from the 18.7% first-half growth rate pointed to some loss of momentum in China’s industrial recovery.
Stocks in focus
Among individual stocks, Tata Power Company declined 3.30% after the Singapore International Commercial Court dismissed the company’s challenge to arbitral awards in its dispute with Kleros Capital Partners. The court found no breach of natural justice or the fair-hearing rule by the majority of the arbitral tribunal.
ICICI Prudential Asset Management Company fell 4.03% to Rs 3,093 after a large block transaction in early trade. The decline came after promoter Prudential Corporation Holdings launched a stake sale of up to 2% in the company.
In contrast, Bombay Burmah Trading Corporation surged 11.63% after the Supreme Court recalled an earlier observation concerning a Rs 4,655.24 crore lease-rent liability linked to its erstwhile Singampatti tea estate in Tamil Nadu. The court’s August 19 order allowed the company’s interlocutory application seeking recall of the observation made in its May 29 order.
Pine Labs gained 1.42% to Rs 169.25 after a foreign brokerage initiated coverage with a ‘Buy’ recommendation and a target price of Rs 200, implying an upside of roughly 20% from the previous NSE close.
Kitex Garments rose 1.74%, despite India Ratings and Research downgrading its long-term rating to ‘IND BBB+’ from ‘IND A’ with a negative outlook. Its short-term rating was lowered to ‘IND A2’ from ‘IND A1’.
Nahar Spinning Mills declined 0.87% after Crisil Ratings reaffirmed its bank-facility and commercial-paper ratings at ‘Crisil A/Stable/Crisil A1’.
Skipper advanced 1.73% after announcing fresh orders worth Rs 1,305 crore for domestic and international transmission and distribution projects.
Bajaj Finance slipped 0.18% after announcing that it had raised Rs 5,000 crore through private placement of 5 lakh secured, redeemable non-convertible debentures. The securities carry an annual coupon of 8.15% and have a 10-year maturity, with redemption scheduled for August 27, 2036.
Redtape gained 0.48% after shareholders approved the reappointment of Shuja Mirza as managing director for five years from April 1, 2027.
IPO market remains exceptionally active
The primary market continued to attract strong investor interest, although subscription levels varied sharply between issues.
Lumino Industries, whose IPO opened on August 27, received bids for 7,98,37,212 shares against 6,32,05,127 shares on offer, representing subscription of 1.26 times as of 4:30 p.m. IST. The issue carries a price band of Rs 78-82 per share, with a minimum bid of 182 shares, and closes on August 31.
Annu Projects, which opened on August 25 and closes on August 28, was subscribed 0.86 times, receiving bids for 1,52,28,501 shares against 1,76,83,000 shares on offer. Its price band is Rs 94-99 per share and the minimum bid is 151 shares.
Investor appetite was considerably stronger for some other offerings. Skyways Air Services was subscribed 70.94 times, with 2,09,85,50,200 shares bid for against 2,95,83,600 shares on offer. The issue, priced at Rs 131-138, opened on August 24 and closes on August 27.
Symbiotec Pharmalab was subscribed 71.13 times, receiving bids for 93,36,33,525 shares against 1,31,24,929 shares on offer. Its price band is Rs 938-988 and the minimum bid is 15 shares.
The strongest subscription was recorded by Hy-Tech Engineers, which attracted bids for 4,40,88,82,187 shares against 1,81,45,406 shares on offer, translating into a staggering 242.98 times subscription. The issue, priced at Rs 50-53 a share, opened on August 24 and closes on August 27, with a minimum bid size of 283 shares.
The sharp divergence in IPO subscription levels highlights the continued appetite for select primary-market opportunities even as the secondary market faces bouts of volatility.
Outlook
The immediate outlook for Indian equities is likely to remain dependent on three broad forces: the trajectory of global interest rates, institutional flows and the ability of heavyweight stocks to stabilise.
The Nifty’s close below 24,100 will keep the index in focus in the next session, particularly because the decline came alongside a rise in India VIX. Sustained weakness in large-cap financials, telecom and energy stocks could continue to weigh on the headline indices.
At the same time, strong domestic institutional buying provides an important cushion. The relatively better performance of mid- and small-cap indices also suggests that investor risk appetite has not disappeared altogether.
For global investors, the combination of sticky US inflation, elevated Treasury yields, currency pressure and geopolitical uncertainty argues for greater selectivity. Conversely, softer oil prices, resilient domestic liquidity and strong corporate and infrastructure activity could provide support if global risk sentiment improves.
Thursday’s session therefore reinforced a key feature of the current market: the Indian equity story remains structurally resilient, but near-term trading is increasingly being driven by global macroeconomic signals, index-heavy stocks, derivatives positioning and valuation-sensitive profit booking. Investors are likely to watch the 24,100 level closely while assessing whether the recent correction develops into a deeper consolidation or remains a short-term adjustment after recent gains.
Disclaimer: Stock market investments are subject to market risks. Please consult with a certified financial advisor before making any investment decisions.