BSE Sensex continues to be in bear grip; Nifty50 below 22,600 - top reasons for fall

India's stock markets continued their downward trend on Tuesday, with the Nifty50 and BSE Sensex plunging over 0.8% each after Monday's sharp declines. Investors remained cautious amid concerns over higher crude oil prices, rising bond yields and other uncertainties weighing on market sentiment. The Nifty50 closed at 22,586.60, down 194 points or 0.85%, while the BSE Sensex fell to 72,138.99, down 633 points or 0.87%.

The sharp sell-off erased nearly Rs 4 lakh crore from the combined market capitalization of listed companies on the BSE, taking the total market value to Rs 474 lakh crore.

Bajaj Finance led the losers on the Sensex, with shares dropping around 2%. The Nifty Midcap 100 and Nifty Smallcap 100 also saw declines of around 0.8%. Dalal Street was also tracking the broader weakness in global markets, with US stocks ending the previous session lower, the tech-heavy Nasdaq falling more than 0.9% and the S&P 500 declining around 0.8%. Asian markets were also under pressure, with Japan's Nikkei dropping more than 1% and several other regional markets declining by nearly 1%.

The reasons behind the market crash included the US-Iran peace deal seeming distant, with US President Donald Trump denying reports of offering Iran sanctions relief and access to frozen Iranian funds in exchange for nuclear programme concessions. Meanwhile, US and Iranian officials held separate discussions with mediators on Monday, as peace talks continued.

Oil prices rose to multi-year highs, with Brent crude futures climbing above $107 per barrel and WTI crude futures moving past $94 per barrel. Bond yields also surged to fresh multi-year highs, further pressuring equity markets. The Indian rupee weakened to a two-month low of 96.1450 against the US dollar, as concerns over the impact of rising oil prices on the net energy-importing economy persisted.

Foreign institutional investors (FIIs) continued to sell shares, offloading over Rs 5,353 crore worth of Indian equities on Monday, marking a shift in FII flows from positive to negative. The monthly expiry of Nifty's F&O contracts on Tuesday added to market volatility, with the Reserve Bank of India set to hold its Monetary Policy Committee (MPC) meeting from October 5 to October 7, with expectations of a rate hike amid a broader global tightening cycle.