Sensex Slides 679 Points Even After FII and DII Buying as Asia's AI Sell-Off and $110 Brent Bite

Institutional money came into Indian equities on Wednesday. It did not stop the slide. The BSE Sensex dropped as much as 678.90 points, or 0.92 per cent, to 73,030.79 in Thursday morning trade, and the NSE Nifty 50 slipped 250.90 points, or 1.10 per cent, to 22,568.10. It was the third losing session in a row for the benchmarks.

By around noon the indices had pulled back a little but stayed firmly in the red, with the Sensex at 73,238.21 (down 471.48 points, or 0.64 per cent) and the Nifty at 22,635.90 (down 175.45 points, or 0.77 per cent). The Sensex had opened at 73,343.33 against Wednesday's close of 73,709.69.

Buying that didn't help

Exchange data showed foreign institutional investors bought a net Rs 1,022.32 crore of Indian shares on Wednesday, and domestic institutions added Rs 1,614.32 crore. Usually, nearly Rs 2,600 crore of combined institutional buying would cushion the market. This time it didn't.

V K Vijayakumar of Geojit Investments said high crude prices and firm US bond yields are giving bears the confidence to build short positions, which is why the market is falling even on days when both FIIs and DIIs are buying. He also noted that money is rotating away from expensive mid- and small-cap stocks toward large caps that look reasonably valued. That fits the broader market's weakness: the Nifty Midcap index was down about 1 per cent at midday.

Asia's AI hangover

Most of the selling pressure came from abroad. Asian markets fell sharply after quarterly results from Meta Platforms and Tesla brought back worries about the cost of the AI investment boom and when it will pay off. Meta raised its 2026 capital spending forecast to between $135 billion and $145 billion. South Korea took the biggest hit: SK Hynix fell about 6 per cent and Samsung Electronics nearly 5 per cent. At one point South Korea's Kospi was down about 3.1 per cent, Hong Kong's Hang Seng about 3 per cent and Japan's Nikkei about 1.9 per cent.

Oil back above $110

Crude gave the sell-off a second push. Brent rose nearly 2 per cent to about $110.68 a barrel after Yemen's Houthi rebels struck more targets in Saudi Arabia, an escalation that led Washington to order non-emergency staff and their families out of its missions in the kingdom. For an economy that imports most of its oil, triple-digit crude puts pressure on inflation, the current account and the rupee. The rupee weakened 12 paise to 94.50 against the dollar in early trade.

The oil move showed up in sector performance. Nifty Metal fell 1.82 per cent and Nifty Auto 1.76 per cent in early deals, and FMCG, pharma and realty indices each lost more than 1 per cent. Oil marketing companies, paint makers and tyre manufacturers, which all depend heavily on crude-linked inputs, came under pressure. Power Grid, Maruti Suzuki, Mahindra & Mahindra, Tata Steel and Bajaj Finance were among the biggest drags on the Sensex. Infosys, Tech Mahindra and Eternal held up better. Eternal had reported a near-doubling of quarterly profit a day earlier.

The RBI angle

The Reserve Bank's latest Monetary Policy Committee minutes, released on Wednesday, added to the cautious mood. Members indicated that more rate increases may be needed to bring inflation under control, though they stopped short of backing an aggressive tightening cycle because of the risks to growth. For borrowers, the message is that rates are more likely to rise than fall in the months ahead. Our EMI calculator shows how even a small rate change affects a monthly loan payment.

Levels to watch

The India VIX, a gauge of expected volatility, rose nearly 6 per cent to 16.55. Technical analysts are watching the 22,590 area on the Nifty. Anand James of Geojit said that level needs to hold to avoid a deeper breakdown, and that only a move back above 22,840 would confirm a recovery. Kotak Neo's Shrikant Chouhan sees a range of 22,650 to 22,500 if the index stays below 22,750.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.