Sensex and Nifty decline as IT and bank shares face selling

What happened to Sensex and Nifty

Indian benchmark indices Sensex and Nifty traded lower on Monday, 19 October, as investors locked in profits in banking and IT shares following the market's strongest weekly gains since April.

The 30-share BSE Sensex dropped more than 500 points to trade around 74,200 during the session, after closing at 74,729 on Friday, 16 October. The broader NSE Nifty 50 slipped about 150 points to trade near 23,000, reversing a portion of the 950-point recovery recorded over the preceding two weeks.

Private bank shares and technology heavyweights led the intraday decline, alongside mixed cues across Asian markets and a weak close on Wall Street on Friday.

Why the stock market declined

A combination of global energy price volatility, mixed international signals, and routine profit-taking following a sharp two-week rally triggered the pull-back.

Brent crude oil prices rose toward $110 a barrel late last week, climbing over 5% on supply constraints and elevated demand from global shipping. Overseas, US markets closed sharply lower on Friday, with the tech-heavy Nasdaq falling 2.14% and the S&P 500 down 1.09%.

Asian markets showed mixed performance during Monday trading.

Foreign selling met by strong domestic inflows

Foreign institutional investors (FIIs) remained net sellers for a ninth consecutive week, unloading ‣7,282 crore in equities over seven sessions. However, the pace of foreign outflows showed signs of moderation, easing to ‣89.91 billion last week from ‣302.94 billion in the previous period.

The foreign sell-off has been met by steady support from domestic institutional investors (DIIs). Month-to-date figures show domestic institutions bought ‣481.68 billion in Indian equities, virtually absorbing the ‣487.69 billion offloaded by foreign funds over the same period.

Bajaj Broking deputy vice-president of research Pabitro Mukherjee noted that domestic buying has helped maintain overall stability, leaving Nifty up more than 2% from its September-end level.

Currency stability and upcoming market catalysts

Underlying financial stability remains anchored by a recovering currency and robust primary market activity. The Indian rupee recorded its strongest weekly gain in seven months last week, driven by official policy measures, closing at ‣94.96 against the US dollar.

Markets are also preparing for major domestic catalysts this week. Anchor bidding opens on Monday for Jio Platforms' initial public offering, which is set to become India's largest primary market issue. The fresh issue of up to 27 crore shares is priced between ‣1,065 and ‣1,119 per share.

A heavy slate of second-quarter corporate earnings will also guide trading, with companies including Infosys, Kotak Mahindra Bank, UltraTech Cement, Tata Motors, Swiggy, and several Adani group entities scheduled to report results.

Indian financial markets will remain closed on Tuesday, 20 October, for the Dussehra holiday before trading resumes on Wednesday.