Sensex Ends Nearly 300 Points and Nifty Falls Below 25,950 Lower as Volatility Rises and Year-End Caution Deepens
| Index | Price | Change | % Chg |
| Nifty 50 | 25,942.10 | 100.20 | -0.38% |
| Nifty Bank | 58,932.35 | 79.00 | -0.13% |
| Nifty Financial | 27,363.50 | 67.25 | -0.25% |
| BSE SENSEX | 84,695.54 | 345.91 | -0.41% |
Indian equity markets closed lower on Monday, extending their recent losing streak as investors stayed cautious amid thin year-end trading volumes, persistent foreign fund outflows and rising volatility. After opening with mild gains, both the Sensex and the Nifty gave up early momentum and slipped into the red as selling pressure intensified across index heavyweights.
The BSE Sensex fell 346 points, or 0.41 percent, to settle at 84,695.54, while the NSE Nifty 50 declined 100 points, or 0.38 percent, to close below the psychological 26,000 mark at 25,942.10. The decline marked the Nifty’s third straight session of losses, reinforcing near-term caution among investors.
Market participants said the absence of strong domestic or global triggers, combined with holiday-thinned participation, has pushed equities into a consolidation phase, even as the medium-term outlook for 2026 remains constructive.
Also Read : Metals Retreat From Peaks As Gold, Silver, Copper Drop Up To 13%—What Triggered The Fall?
Early Gains Fade as Heavyweights Drag Benchmarks Lower
The benchmark indices struggled to sustain early gains as selling emerged in select large-cap stocks. On the 30-stock Sensex, Adani Ports, Power Grid, HCL Technologies, Trent and Bharat Electronics were among the biggest laggards, declining between 1 percent and 2 percent.
Sectorally, energy stocks slipped around 0.5 percent, weighed down by a nearly 1 percent drop in Reliance Industries. The Nifty IT index fell 0.8 percent, reflecting weak global cues and cautious positioning ahead of key earnings updates.
The broader market also remained under pressure. Mid-cap stocks declined about 0.5 percent, while small-cap shares fell nearly 0.7 percent, indicating broad-based risk aversion rather than stock-specific selling.
Metal Stocks Buck the Trend as Global Prices Surge
Amid the broader weakness, metal stocks provided some relief to the benchmarks. Tata Steel and JSW Steel emerged as key gainers on the Nifty 50, rising up to 3 percent, supported by a sharp rally in international metal prices.
However, gains in metals were insufficient to offset losses in IT, energy and select financial stocks, keeping overall market sentiment subdued.
Commodity Volatility Adds to Market Nervousness
Volatility in commodity markets also weighed on sentiment. MCX Silver March futures crashed by nearly ₹21,000 per kg within an hour during the afternoon session, plunging to ₹2,33,120 per kg, as traders rushed to book profits after a record rally.
The sharp correction came as geopolitical tailwinds cooled, reducing safe-haven demand after silver had touched an all-time high of ₹2,54,174 earlier in the day. The sudden move highlighted fragile risk appetite and added to intraday nervousness across asset classes.
Top Gainers and Losers Reflect Selective Positioning
Stock-specific action highlighted a defensive and selective approach by investors.
Top gainers:
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Tata Steel (+1.88%)
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Tata Consumer Products (+1.59%)
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Asian Paints (+1.04%)
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Grasim Industries (+1.00%)
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Nestlé India (+0.58%)
Top losers:
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Adani Ports (-2.27%)
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HCL Technologies (-1.82%)
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Power Grid (-1.75%)
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Trent (-1.43%)
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Adani Enterprises (-1.30%)
At the sector level, media stocks gained 0.93 percent, while FMCG edged up marginally by 0.11 percent, reflecting defensive buying. On the downside, consumer durables, IT, realty, auto and pharma stocks saw sustained selling pressure.
Key Reasons Behind the Market Decline
1) Thin Year-End Trading Volumes Cap Upside
One of the primary factors dragging markets was subdued participation ahead of the year-end. Trading volumes have steadily declined as institutional and retail investors remain on the sidelines.
“With the holiday season and calendar-year close, trading volumes remain thin due to subdued year-end participation, keeping markets muted,” said Aakash Shah, research analyst at Choice Broking, in comments to Reuters.
Data shows that the Nifty 50’s average daily trading volume in December dropped to around 250 million shares, compared with about 300 million shares in November.
2) Persistent FII Selling Weighs on Sentiment
Foreign Institutional Investors (FIIs) continued to remain net sellers, offloading equities worth ₹317.56 crore on Friday, marking the fourth consecutive session of outflows. Sustained selling by overseas investors has capped any meaningful recovery in domestic equities.
Market participants noted that FIIs remain cautious amid global uncertainty, elevated valuations and currency-related risks.
3) Rising Crude Oil Prices Add Inflation Concerns
Crude oil prices edged higher, adding to investor unease. Brent crude rose over 1 percent to around $61.27 per barrel. Higher oil prices tend to worsen India’s import bill and stoke inflation concerns, which can limit the central bank’s policy flexibility and weigh on equity valuations.
4) Weak Global Cues Limit Risk Appetite
Global cues remained mixed. US markets ended flat on Friday, while US futures traded on a subdued note on Monday morning India time. Asian markets were largely weak, with Japan’s Nikkei 225 trading lower.
“A strong rebound in the market needs a trigger like a US-India trade deal with favourable tariffs for India. There is no clarity yet on when this will happen,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
5) Rupee Depreciation Pressures Markets
The Indian rupee weakened further, depreciating 5 paise to 89.95 against the US dollar in early trade and eventually closing at 89.98. Foreign fund outflows, higher crude prices and weak equity sentiment weighed on the currency.
A weaker rupee tends to hurt import-heavy sectors and raises concerns about inflation and corporate margins.
6) Rising India VIX Signals Higher Uncertainty
Adding to the cautious mood, India VIX—the market’s volatility gauge—jumped over 6 percent to 9.71, indicating rising uncertainty among investors. A higher VIX typically reflects increased demand for protection and a lower appetite for risk-taking.
F&O Ban List Signals Elevated Derivatives Risk
The NSE’s F&O ban list remained active as derivatives positions stayed elevated in select stocks amid rising market volatility. SAMMAANCAP continued in the ban category, while counters such as IRCTC, Dixon Technologies, Adani Enterprises, RVNL, MCX, SAIL, NBCC and NMDC moved closer to the ban threshold. Analysts said stocks nearing the F&O ban often witness sharper price swings due to restricted fresh positions, warranting caution for traders in the current volatile environment.
Technical View Points to Consolidation Phase
From a technical perspective, analysts believe the market is entering a consolidation zone. Anand James, Chief Market Strategist at Geojit Investments Limited, said the Nifty is trading close to its 20-day simple moving average.
“An early pullback is possible, but a move above 26,127–26,150 is needed to confirm strength. Failure to hold above 26,050–26,077 could lead to further downside towards 25,935–25,850,” he said.
Market breadth remained weak, with decliners significantly outnumbering advancers, reflecting broad-based selling pressure.
What Should Investors Watch Next?
With limited trading sessions left in the year, experts expect markets to remain range-bound in the near term. Attention is likely to shift toward upcoming Q3 earnings, movement in global markets, crude oil prices and developments around trade negotiations.
In the current environment, analysts suggest investors focus on high-quality large-cap stocks with strong earnings visibility and balance-sheet strength, while avoiding aggressive bets amid rising volatility.
As markets head into the new year, clarity on global growth, policy direction and corporate earnings will be key in determining whether the recent consolidation gives way to a fresh trend in 2026.
FAQs Sensex Ends Nearly 300 Points and Nifty Falls Below 25,950
Why do stock markets often turn volatile during year-end trading despite no major negative news?
Year-end trading typically sees lower participation from institutional investors and traders due to holidays and book closures. With thinner volumes, even modest buying or selling can lead to outsized price swings, making markets appear more volatile despite the absence of fresh economic or corporate triggers.
How does persistent FII selling impact Indian markets when domestic investors are net buyers?
While domestic institutional investors (DIIs) can cushion sharp declines, sustained foreign institutional investor (FII) outflows often cap upside momentum. FIIs influence large-cap stocks, currency markets, and overall sentiment, meaning their selling can keep benchmarks range-bound even when DIIs step in.
What does a rising India VIX at low absolute levels indicate about investor sentiment?
A rising India VIX from historically low levels signals growing uncertainty rather than panic. It suggests investors are beginning to hedge against potential downside risks such as global macro shocks, earnings surprises or geopolitical developments, even if headline indices are not falling sharply.
Why do large-cap stocks tend to outperform mid- and small-caps during uncertain market phases?
During periods of uncertainty, investors gravitate towards large-cap companies due to their stronger balance sheets, predictable earnings, and better liquidity. Mid- and small-cap stocks, which rely more on growth optimism, often see profit-booking when risk appetite moderates.
How do crude oil price movements indirectly affect Indian equity markets?
India is a major crude oil importer, so rising oil prices increase the country’s import bill and inflation risks. This can weaken the rupee, pressure corporate margins, and limit the Reserve Bank of India’s flexibility on interest rates—factors that collectively weigh on equity valuations.
What does repeated failure of Nifty to hold above key resistance levels suggest for short-term traders?
When Nifty repeatedly fails to sustain above resistance zones, it signals supply pressure and cautious sentiment. For short-term traders, this often points to a consolidation or corrective phase, where buying on dips near strong support levels is preferred over chasing breakouts.
Why do stocks entering the F&O ban list often experience higher volatility?
When a stock enters or nears the F&O ban list, fresh derivative positions are restricted, reducing liquidity in the futures and options segment. This can amplify price swings in the cash market as traders adjust positions, increasing short-term volatility and risk.
