Why Did Sensex Plunge Over 650 Points Today?

A recurring theme this week has been foreign outflows, and that pressure didn’t ease today. Overseas funds have been selling Indian equities, putting the Sensex under pressure, which dropped around 650 points, or 0.8%, amid broader risk‑off sentiment tied to global macro developments and rising bond yields abroad. This relentless selling has heightened volatility, with many traders calling it one of the heavier weights on the Sensex in recent sessions.

The currency side added to the nervousness. The Indian rupee slipped toward ₹92 against the US dollar, weakening further from earlier in the week. A softer rupee affects valuations for global funds repatriating gains or cutting losses and adds to domestic inflation concerns, particularly for imported commodities or capital equipment.

Even as some global markets have steadied, domestic sentiment isn’t yet convinced that a Sensex recovery is ready to stick, leaving investors cautious.

Sector Action and Stock Movers

Not everything was bleak, but gains were thinly spread and often outweighed by losses. Early in the day, consumer durables and metal stocks managed modest gains—usually a sign of selective buying. But key bellwethers in other areas, particularly power and media names, lagged.

Among individual names, traders noted pockets of strength in large caps such as Asian Paints and Dr. Reddy’s on some short‑term buying interest. But the leaders for much of the broader market were underperformers. That patchwork performance reflects how investors are skittish—ready to pick at bargains but hesitant to commit broadly.

What Traders Are Watching Now

Talking to a few desk strategists around midday, there was a common refrain: markets are trying to price in two big, competing narratives at once.

One is the idea that global volatility might be peaking, with softer cues in some developed equity markets and easing geopolitical jitters in certain corridors. This gives some bullish players a reason to edge back in.

The counterpoint is that foreign outflows remain persistent, and until there’s a clear shift in global fund flows, domestic markets may struggle to sustain meaningful rallies. Many traders are watching liquidity levels, rupee behaviour, and upcoming earnings beats or misses for clues about direction.

Short-term chart watchers are keeping an eye on Nifty’s support zone near 25,000, a key psychological and technical level. If it breaks decisively, the market could see further downside momentum. But if it holds, expect some whippy counter-moves, reflecting short-term volatility and indecision among traders.

Inside the Broader Market Mood

It’s hard to shake the impression that markets are in a holding pattern—not collapsing, but not charging either. Domestic institutional bodies have stepped in at times to cushion heavy selling, but they can only do so much when foreign players are leaning out of equities.

At the same time, traders say recent action suggests sentiment is selective, not uniform: quality businesses with resilient earnings still find buyers, even on weaker days. A few institutional desks noted that some defensive and high‑quality large caps have seen better support than the broader index, hinting at a bifurcated market.

Bottom Line for Investors

For long‑term holders, narratives aren’t shifting wildly—fundamentals haven’t suddenly broken. But volatility remains high, and the near‑term picture is clouded by capital flows and macro headwinds.

For short‑term traders, the current environment is noisy, and many are anchoring decisions to volatile drivers like rupee swings, foreign flows, and tactical earnings reactions.

In markets like these, patience often matters as much as positioning.