Whenever there is a big drop in the stock market, two main reasons are definitely mentioned behind it. First, the increase in the price of crude oil. Second, a big drop in the rupee. Both of these were in favor of the Indian stock market today. Where the rupee saw a bumper jump of 91 paise. At the same time, crude oil prices fell by about 1 percent. Even then, the stock market lost more than 1000 points from the day’s peak during the trading session and the Sensex saw a 625 point drop from the previous trading session. Because of this, stock market investors have suffered a loss of around 7 lakh crore rupees during the trading day.

In fact, 5 reasons weigh heavily on the rupee and crude oil prices. That includes rising bond yields, which have hit multi-year highs. Profit booking by foreign investors continues. This figure has crossed 3 lakh crore rupees in the current year. The Iran war has heated up again. Due to which the feeling has deteriorated. The decline in Asian markets was also felt in India. Finally the profit booking of investors. The stock market closed on the green last week. The 8 week continuous decline was stopped. Let’s try to understand in the language of statistics, what kind of decline was seen in the stock market and how was it seen?

Crash in the stock market

Both the major stock market indices Sensex and Nifty closed in the green on Monday. While the Sensex opened at 72,771.32 points, up nearly 300 points and touched an intraday high of 72,884.25 points, the Nifty rose over 70 points to open at 22,593.20 points, down from 22,6151 points during the trading session.

After that the reduction process started. The Sensex was down 1,036.15 points from its intra-day peak and was down 624.23 points at 71,848.10 points on the last trading day of last week. At the same time, Nifty, the National Stock Exchange’s flagship index, was down 298.75 points from the day’s high at 22,352.35 points. While compared to the last trading day of last week, Nifty saw a drop of more than 160 points.

On the Sensex, shares of Tech Mahindra fell around 4 percent, while shares of ITC, SBI, Bharti Airtel, Hindustan Unilever, L&T, NTPC, ICICI Bank and Axis Bank declined up to 3 percent. Bucking the trend, shares of M&M, BEL and Trent rose around 1 percent. The broader markets fared well, with the Nifty Midcap 100 and Nifty Smallcap 100 indices rising up to 1 per cent.

Talking about the sectoral indices, Nifty FMCG and Nifty PSU Bank indices fell more than 1%, leading to losses, while Nifty Private Bank and Nifty IT fell more than half a percent. Meanwhile Nifty Auto rose over 1%. Despite benchmark indices trading in the red, overall market sentiment remained positive, with the NSE rising 1,884 against a decline of 1,474, while 101 stocks remained unchanged.

Main causes of decline in stock market

Bond yields at multi-year highs: Bond selling intensified around the world, leading to a big jump in bond yields. In general, these lower-risk government debt contracts appear more attractive than equity markets. The 10-year US Treasury yield posted its biggest quarterly rise of the 21st century in the quarter ended in September, according to a Reuters report. The 10-year US Treasury yield rose above 5.3%, higher than the 2007 peak and the highest since early 2002. The 30-year yield hit 5.6%, a level not seen since 2002. India’s 10-year bond yield hit a three-year high of 7.37%. This comes after the RBI announced measures to drain excess liquidity from the banking sector. The RBI has said that lenders will have to maintain a daily balance of at least 99% of the CRR requirement from the fortnight starting October 16, up from 90% till now.

Continued selling by FIIs: FII selling increased in October. In just six sessions so far in October, foreign investors have collected Rs. 45,125 crore worth of Indian stocks sold, which in the month of September totaled Rs. 45,536 is almost equal to the withdrawal of Rs. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said total FPI equity sales in 2026 could be Rs. 3,60,952 crore has been reached. He said that such huge selling by FPI is the main reason why the Indian market is underperforming this year and Nifty has returned -13.87% so far in 2026.

Tensions rise in the Middle East: Iran has dismissed as “inadequate” the latest US response to its proposal to end the war. Also, Iran has warned that data centers and cables in the area could be attacked if fighting escalates again. Mohsen Rezaei, head of Iran’s Supreme National Security Council, said Washington should clarify issues that are still unclear to Tehran. Meanwhile, Yemen’s Houthi rebels have claimed responsibility for Saturday’s attack on Riyadh International Airport. Thirteen people were killed and more than 300 injured in the attack. Saudi officials also reported that people were injured in another attack at the airport on Sunday. Trump said on Saturday that the US was considering joining Saudi strikes against Houthi rebels as the conflict with Iran, launched by the US and Israel in February, widens.

Weak signals from the global market: Today Dalal Street is also going through decline like Asian markets. South Korea’s Kospi index fell nearly 4%, while Japan’s Nikkei index also closed with losses. China’s Shanghai Composite and Taiwan Weighted Index are also trading with losses. Last week, Wall Street indices closed with gains, but Dow Jones futures are currently seeing a slight uptick.

Profit Booking: After the Sensex and Nifty closed higher last week and snapped an eight-week losing streak, Dalal Street saw a decline today. One reason for today’s decline could also be profit booking.

How can the stock market be?

VK Vijayakumar, chief investment strategist at Geojit Investments, said the market is passing through a phase where external challenges outweigh domestic benefits. He said higher crude oil prices and higher US bond yields will continue to weigh on the market. FIIs will continue to sell in the near future and DIIs will continue to absorb their sales. According to analysts, the market condition is likely to remain the same in the near future. The biggest question is how does this situation progress and at what level will the market be after a few months?

India is one of the worst performing markets this year due to external challenges and continued FII selling, with a negative return of around 14 per cent so far in 2026, Vijayakumar said. This sharp decline has made valuations reasonable and attractive in many segments, he said. Also, strong GDP growth forecast of 7.1 percent for FY27 and improving corporate profit position provide strong fundamental support to the market.