Sensex, Nifty End Lower Near Six-Month Lows as Rupee Tests 96 Against Dollar

Indian benchmark equity indices extended their decline on Tuesday, with the Sensex and Nifty 50 ending lower for a second consecutive session as investors remained cautious amid elevated crude oil prices, foreign fund selling and rising global bond yields.

The Sensex closed at 72,529.07, down   242.65 points, or 0.33%. The Nifty 50 ended at 22,716.20, declining 64 points, or 0.28%.

Both benchmarks recovered from their intraday lows on the monthly derivatives expiry session, but remained close to levels last seen several months ago.

Nifty Falls 6.8% From Peak

The Nifty dropped to an intraday low of 22,569.65, while the Sensex slipped to 72,064 before recovering.

The Nifty found buying support around its 200-week moving average near 22,600. According to the supplied market commentary, the index is now about 6.8% below its previous peak and has recorded losses for eight consecutive weeks.

Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services, said domestic economic activity remained a counterbalance to weakness in global markets.

Broader Markets Underperform

Selling was more pronounced across the broader market.

The Nifty Midcap 100 declined 0.99%, while the Nifty Smallcap 100 fell 0.80%. Among Nifty 500 constituents, 344 stocks closed lower compared with 152 that advanced.

Several sectors finished in negative territory:

• Consumer durables: -2.71%
• Chemicals: -2.31%
• Realty: -2.00%
• Nifty IT: -1.48%

Cement, automobile, IT and FMCG stocks also came under pressure.

The IT index recorded its eighth consecutive session of decline, adding to the weakness in technology stocks.

Pharma Stocks Gain on US Drug Tariff Development

Pharmaceutical stocks moved against the broader market trend.

The sector gained after the US Commerce Department announced that India and 19 other jurisdictions would receive a zero rate on specified specialty drugs and their ingredients.

At the same time, a 100% tariff on patented pharmaceuticals took effect. Generic medicines were reported to remain outside the scope of those tariffs.

Among individual stocks, Adani Enterprises and Adani Ports were among the leading Nifty gainers, while Titan and Wipro were among the major laggards.

Rupee Briefly Breaches 96 Against Dollar

The Indian rupee came under pressure during the session, briefly moving beyond the 96-per-dollar level before recovering.

Dilip Parmar of HDFC Securities attributed the recovery to factors including Reserve Bank of India action, a retreat in global crude prices and foreign inflows associated with index rebalancing.

Motilal Oswal put the rupee at around 96.2 per US dollar, describing it as a two-month low.

The currency remains an important variable for Indian equities because a weaker rupee can increase the domestic cost of imported commodities, particularly crude oil.

Crude Oil Remains a Key Market Concern

Oil prices continued to influence investor sentiment.

Brent crude climbed to an intraday high of $107.87 a barrel before easing to around $105. The movement came as discussions between the US and Iran remained stalled, according to Kotak Securities’ Kaynat Chainwala.

Supply developments also remained in focus. Saudi Arabia was reported to be increasing East-West pipeline throughput to approximately 3.5 million barrels per day, while flows through the Strait of Hormuz had improved from early September levels.

For India, sustained high crude prices can put pressure on the import bill and the rupee while also affecting inflation expectations and corporate costs.

Bond Yields Rise

Bond markets also reflected the challenging global backdrop.

India’s 10-year government bond yield climbed to 7.17%, its highest level since April 2024. The US 10-year Treasury yield was reported above 5.2%.

Higher yields can influence equity valuations by increasing the relative attractiveness of fixed-income assets and raising financing costs.

Meanwhile, India’s August industrial output increased 8.0% year-on-year, marking its fastest growth in two months.

Despite the domestic economic data, foreign institutional investors continued to sell Indian equities.

The India VIX eased to 13.35, indicating that near-term market volatility expectations were comparatively contained despite the continued decline in benchmark indices.

Bank Nifty Also Ends Lower

Banking stocks also finished in negative territory.

The Bank Nifty closed at 54,260, down 0.39%.

The sector’s movement came amid broader concerns over interest rates, currency weakness, foreign capital flows and the direction of global bond yields.

What Investors Will Watch Next

Global economic and commodity indicators are likely to remain important for Indian markets in the coming sessions.

Market participants will track US consumer confidence and JOLTS job openings data, followed by China’s manufacturing PMI, second-quarter GDP data from the US and UK, US crude inventory figures and comments from Federal Reserve Governor Christopher Waller.

Analysts cited in the supplied market commentary identified 22,600 and 22,400 as key support levels for the Nifty, with 22,900 to 23,100 identified as a resistance zone.

Beyond technical levels, investors are likely to monitor movements in crude oil, the rupee, global bond yields, foreign institutional flows and developments involving shipping through the Strait of Hormuz.

The combination of currency movements, energy prices and global interest-rate expectations could continue to influence the direction of Indian equities in the near term.