Sensex, Nifty Close in Red; Nifty Smallcap Index Jumps 1.42%

Indian benchmark indices ended Monday's trading session in the red, giving up their early gains as selling pressure in the heavyweight stocks dragged the market lower. The Sensex declined 547.65 points, or 0.76%, to settle at 71,924.68, while the Nifty 50 lost 157.10 points, or 0.70%, to close at 22,363.35.

The session began on a positive note, supported by the rupee's recovery against the US dollar and some initial relief in crude oil prices. However, the optimism did not last. Selling pressure intensified in FMCG, PSU banking and IT stocks, pulling the Nifty below the 22,400 mark. The Nifty settled almost 288 points lower from the day’s high and Sensex lost more than 900 points from its intraday high as market sentiment weakened. Meanwhile, India VIX, which measures expected market volatility, jumped over 6%, indicating increased uncertainty among market participants.

Monday's decline came immediately after Friday's recovery, when the Nifty had advanced 1.30% and ended its eight-week losing streak on a weekly basis.

Nifty Smallcaps Buck Market Trend, Jump 1.42% as Nifty Falls

Despite weakness in the Sensex and Nifty, broader market indices displayed relatively better performance.

The Nifty Smallcap index gained approximately 1.42%, while the Nifty Midcap index ended marginally higher by around 0.08%.

Sectoral Performance: FMCG, PSU Banking and IT Stocks Lead Sectoral Declines

Sectoral performance was mixed on Monday, with FMCG, PSU banking and IT index coming under selling pressure.

The Nifty FMCG index declined approximately 1.67%, reversing part of the gains recorded during the previous trading session.

IT stocks also faced selling as investors assessed the potential impact of elevated global interest rates and corporate earnings expectations.

Meanwhile, automobile, media and realty stocks demonstrated relative strength, limiting some of the broader market weakness.

Why Were Indian Markets Under Pressure on Monday, October 12?

Here are the key reasons why Indian markets ended in the red on Monday, October 12.

Firstly, persistent selling by Foreign Portfolio Investors (FPIs) continued to weigh on market sentiment.

Foreign investors pulled out approximately ₹44,166 crore from Indian equities during October through October 9. With this, cumulative FPI outflows in CY2026 reached nearly ₹3.04 lakh crore.

The sustained selling has coincided with rising US Treasury yields, a stronger dollar and uncertainty surrounding global interest rates.

Higher yields on US government securities make dollar-denominated investments relatively more attractive, potentially encouraging capital to move away from emerging markets such as India.

Secondly, elevated crude oil prices raised concerns about inflation, while higher US bond yields added further pressure on Indian equities. Crude oil prices remained elevated amid continuing geopolitical tensions in the Middle East.

Brent crude increased approximately 0.65% to trade near $105 per barrel, reversing some of the relief seen earlier in the session.

Higher crude prices remain a concern for India, which relies on imports to meet nearly 90% of its oil requirements.
A prolonged increase in energy prices could raise India's import bill, add to inflationary pressures and increase operating expenses for industries such as aviation, transportation, chemicals and paints.

RBI's Dollar Supply Measures Strengthen the Rupee

The Indian rupee recorded a strong recovery on Monday following a series of measures introduced by the Reserve Bank of India (RBI) over the weekend.

Effective October 12, the central bank introduced a special dollar supply arrangement for three government-owned oil marketing companies: Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.

Under this mechanism, the RBI will provide dollars through designated banks to meet the companies' foreign exchange requirements.

The move is intended to reduce their direct dollar purchases in the spot currency market, thereby easing demand-side pressure on the rupee.

The domestic currency strengthened nearly 1% to approximately ₹95.76 against the US dollar, compared with Friday's closing level of ₹96.73.

European Markets Trade Higher During Ongoing Session

European equity markets traded higher on October 12, contrasting with the weakness in Indian benchmark indices.

Germany's DAX advanced 135.57 points, or 0.54%, to 25,222.84, while the UK's FTSE 100 gained 55.22 points, or 0.52%, to 10,607.27.

France's CAC 40 also traded in positive territory, rising 7.76 points, or 0.10%, to 7,811.09.

US Stock Futures Trade Mixed Ahead of Wall Street Opening

US equity index futures indicated a mixed start for Wall Street on Monday.

Dow Jones futures gained 38 points, or 0.07%, to 51,964.00, while S&P 500 futures rose 6 points, or 0.08%, to 7,865.75.
In contrast, Nasdaq 100 futures declined 31 points, or 0.10%, to 31,077.75, reflecting relatively weaker sentiment towards technology-heavy stocks.