Market Crash 2026: Sensex & Nifty Plunge, Wiping ₹16 Lakh Crore

A Turbulent Week on Dalal Street

The Indian stock market witnessed a severe downturn this week, with benchmark indices recording significant losses. A combination of domestic and global factors triggered a broad-based sell-off, leading to a substantial erosion of investor wealth. The S&P BSE Sensex and NSE Nifty 50 both tumbled, reflecting heightened caution among market participants. By the end of the week, the Sensex had declined by 2,032.65 points, or 2.43%, while the Nifty 50 shed 645.7 points, or 2.51%.

Unpacking the Market Carnage

The week began with heavy selling, pushing the Nifty close to the 25,000 mark and the Sensex below 81,500. A brief mid-week rebound offered a glimmer of hope as the Nifty recovered to around 25,290, but the recovery proved short-lived. Renewed selling pressure quickly erased these gains, dragging the indices back down. The market capitalization of BSE-listed companies plummeted by ₹16.28 lakh crore over the week, a stark indicator of the scale of the correction. On Friday alone, market value dropped by nearly ₹7 lakh crore to ₹451.56 lakh crore.

Multiple Factors Fuel the Sell-Off

Analysts attribute the sharp decline to a confluence of negative triggers rather than a single event. The sell-off followed a period of gains, with profit booking being a primary driver after markets had risen for three consecutive sessions. Both the Sensex and Nifty had gained approximately 1.4% in the preceding three days, supported by December-quarter earnings that were largely in line with expectations. However, sentiment quickly soured as several headwinds emerged.

Macroeconomic Pressures Mount

Rising crude oil prices and a weakening Indian rupee intensified macroeconomic concerns. The rupee depreciated to an all-time intra-day low of 92 against the US dollar, raising worries about inflation and the nation's fiscal deficit. Higher crude prices are a significant negative for India, a major oil importer, as they can widen the trade gap and fuel inflationary pressures. These concerns, coupled with persistent outflows from Foreign Institutional Investors (FIIs), weighed heavily on investor confidence.

Sectoral and Stock-Specific Weakness

The selling pressure was not confined to a few sectors but was evident across the board. All sectoral indices ended the week in the red. Banking stocks were major contributors to the decline, with Kotak Mahindra Bank, Axis Bank, and IndusInd Bank falling between 1% and 1.8%. The Bank Nifty index slipped, adding to the pressure on the headline indices. IT, real estate, and auto stocks were also among the biggest losers. Heavyweight stocks, including those from the Adani Group, which shed $12.5 billion in market capitalization, amplified the downturn. Reliance Industries, TCS, and Wipro also dragged the benchmarks lower.

Key Market Indicators

The market downturn was accompanied by a sharp increase in volatility, signaling rising uncertainty among investors. The India VIX index, often referred to as the 'fear gauge', gained over 8% during one session. This spike coincided with the Sensex derivatives expiry, which typically increases intraday market swings.

Expert Analysis on the Downturn

Market experts pointed to a combination of factors for the sharp correction. Mehul Kothari of Anand Rathi Shares and Stock Brokers highlighted persistent FII outflows, weak Q3 earnings trends in specific sectors, and continued rupee weakness as key drivers. Similarly, Vinod Nair of Geojit Investments Limited noted that domestic markets remained cautious amid uncertainty around U.S. trade policy and rising bond yields. The sentiment was firmly risk-averse, with global geopolitical risks, including stalled US trade talks, magnifying the downturn. The substantial weight of certain stock groups, like the Adani stocks, in the Nifty 50 also magnified the index's retreat.

Looking Ahead

The market's direction in the coming weeks will likely be dictated by several key factors. The ongoing corporate earnings season will be closely watched for signs of strength or weakness. Furthermore, global macroeconomic signals, developments in global trade conditions, and geopolitical events will continue to be important influences on investor sentiment. Market participants will also be keenly awaiting commentary from regulatory bodies for insights into future policy trajectories.