Sensex Falls 780 Points: 3 Reasons Behind Market Crash

Indian stock markets came under heavy selling pressure on Wednesday, October 28, as the Sensex fell nearly 800 points and the Nifty slipped below the 22,600 mark. Weakness in information technology (IT) stocks, a sharp rise in crude oil prices and continued foreign investor outflows weighed on market sentiment.

At around 10:50 am, the BSE Sensex was trading at 72,818.40, down 780.27 points or 1.06%. The NSE Nifty 50 stood at 22,556.80, declining 192.40 points or 0.85%.

The selling extended across several sectors, with IT stocks leading the decline. The Nifty IT index fell 3.21%, while FMCG and oil and gas stocks also faced significant pressure. Financial services, private banks, metals and real estate shares traded lower as investors assessed global economic risks and the outlook for energy prices.

Pharmaceutical and healthcare stocks were among the relatively stronger segments of the market. The Nifty Smallcap 100 was marginally higher, while the Nifty Midcap 100 declined 0.31%.

Dr V K Vijayakumar, chief investment strategist at Geojit Investments Limited, said the market had turned decisively weak, citing rising crude oil prices, geopolitical uncertainty and persistent foreign portfolio investor (FPI) selling as major concerns.

Three factors were particularly important in explaining the market decline: caution ahead of the US Federal Reserve’s policy decision, renewed concerns about crude oil supplies and continued foreign investor withdrawals.

1. IT Stocks Slide Ahead of the US Federal Reserve Decision

Information technology stocks were among the biggest drags on the domestic market on Wednesday, as investors positioned themselves ahead of the US Federal Reserve’s monetary policy announcement later in the day.

The market’s concern centred on the outlook for US interest rates. Investors were watching for signals about whether borrowing costs could remain elevated for longer and how policymakers might respond if inflation remained persistent.

The Federal Reserve’s decisions matter to global markets because US interest rates influence borrowing costs, financial conditions, currency movements and investment flows. Expectations of tighter monetary policy can also affect how businesses plan spending and expansion.

Why US Interest Rates Matter to Indian IT Companies

The United States is a major market for Indian IT service providers. Companies such as Infosys, Tata Consultancy Services (TCS), Mphasis, Tech Mahindra and HCLTech generate significant business by supplying technology and consulting services to international clients.

Their services cover software development, cloud migration, digital transformation, enterprise technology and artificial intelligence-related projects. Demand for these services can be affected when clients become more cautious about spending.

If borrowing costs remain high, American companies may delay discretionary technology projects, reconsider expansion plans or take longer to approve new contracts. These decisions can influence the pace at which IT service providers convert their project pipelines into revenue.

The concern is therefore not limited to the immediate Federal Reserve decision. Its guidance on the future direction of interest rates could influence corporate spending expectations and the demand outlook for Indian technology companies.

IT Stocks Record Broad-Based Losses

Selling was widespread across the IT sector during Wednesday’s morning session. At around 10:50 am, the major stocks recorded the following declines:

• Infosys: Down 4.66%.
• Mphasis: Down 4.86%.
• TCS: Down 3.02%.
• Tech Mahindra: Down 3.13%.
• HCLTech: Down 2.63%.

The Nifty IT index fell 3.21%, while the Nifty MidSmall IT and Telecom index declined 1.92%, according to the market figures provided.

Because major IT companies are important constituents of the Indian equity market, broad-based selling in the sector can put additional pressure on the benchmark indices.

However, the declines do not establish that the Federal Reserve’s decision alone caused the sell-off. Rising crude oil prices, geopolitical uncertainty and foreign investor selling were also contributing to the weakness.

2. Crude Oil Rises Above $115 After a Fresh Attack

Rising crude oil prices added to concerns about India’s economic outlook and the profitability of energy-sensitive businesses. Brent crude was trading at $115.54 per barrel, up 1.46%, while US West Texas Intermediate (WTI) crude gained 1.47% to $101.37.

Oil prices opened with a gap-up of around 1.3% following an attack on a Saudi Arabian refinery. The development renewed concerns about possible energy supply disruptions amid continuing geopolitical uncertainty in the Middle East.

Investors closely monitor developments affecting major oil-producing regions because concerns about production, exports or transportation can push prices higher even before a sustained physical supply shortage is confirmed.

What Analysts Say About Crude Oil Prices

Kaveri More, commodity technical analyst at Choice Broking, said crude prices had moved higher following the attack. At the time of her assessment, Brent was trading around $115.70 per barrel, while WTI was near $101.10.

In the domestic futures market, crude oil was hovering around Rs 9,630 on the Multi Commodity Exchange (MCX). More identified the Rs 9,470–Rs 9,340 range as an immediate support zone.

She said further gains would depend on whether the disruption affected actual production or export flows. A wider escalation could sustain upward momentum, while signs of easing supply concerns could prompt investors to book profits.

These price levels and assessments represent market commentary at the time of the report. Crude oil prices can change rapidly in response to geopolitical developments, supply data and shifts in global demand expectations.

Why Higher Oil Prices Are Bad News for India

India depends heavily on imported crude oil, making international energy prices an important factor in its economic outlook. A prolonged increase in crude prices can raise the country’s import bill, put pressure on the rupee and increase inflation risks.

Higher oil prices can also raise transportation and production costs for businesses. Companies that rely on fuel-intensive operations or petroleum-based inputs may face higher expenses, potentially reducing profit margins if they cannot pass those costs on to customers.

Consumers can also feel the impact through transportation expenses and the prices of goods whose production or distribution depends on energy. If inflationary pressures intensify, policymakers may have less flexibility to ease monetary conditions.

Dr V K Vijayakumar of Geojit Investments said Brent crude rising above $115 was negative for the Indian economy and financial markets. He also referred to reports of possible renewed US strikes on Iran after the US midterm elections, adding to concerns about a potential escalation in the region.

The Nifty oil and gas index was down 1.99% at around 10:50 am, reflecting weakness in the sector as the broader market remained under pressure.

3. Continued FPI Selling Weighs on Indian Equities

Persistent selling by foreign portfolio investors was another major concern for the Indian Stock Market. Foreign Investors can influence share prices through their buying and selling activity, particularly when the volume of outflows is large relative to available demand.

When overseas investors withdraw capital, domestic investors may struggle to absorb the additional supply of shares, increasing downward pressure on prices. The effect can be particularly visible in heavily traded stocks and benchmark indices.

Foreign investor decisions are influenced by several factors, including global interest-rate expectations, currency movements, relative valuations, economic growth prospects and geopolitical risks. Consequently, outflows do not necessarily reflect a negative assessment of every Indian company.

Why Crude Prices and Foreign Flows Matter Together

Vijayakumar said two conditions were important for a recovery in Indian equities: crude oil prices needed to decline, and FPIs needed to stop selling and turn buyers.

The two factors can reinforce each other. Higher crude oil prices may increase India’s import costs and inflation risks, potentially affecting the rupee and corporate earnings expectations. At the same time, concerns about inflation and global financial conditions can influence foreign investors’ willingness to hold Indian equities.

If oil prices remain elevated and foreign selling continues, the combination could make it harder for the market to recover sustainably. Conversely, easing energy prices and a moderation in overseas outflows could improve sentiment, although other domestic and global factors would still matter.

Could Changes to Long-Term Capital Gains Tax Help?

Vijayakumar also raised the possibility of changes to the long-term capital gains (LTCG) tax regime, arguing that sustained foreign investor withdrawals were beginning to affect India’s otherwise strong macroeconomic fundamentals.

He said: “For the Indian market to revive there are two important conditions now. One, crude prices have to decline. There is no clarity on that. Two, FPIs have to stop their relentless selling and turn buyers.”

He further argued that changes to LTCG taxation appeared increasingly likely, citing foreign investor outflows of $19 billion in 2025 and $31 billion so far in 2026.

These figures and the proposed tax changes reflect the expert’s assessment as presented in the source material. They do not establish that the government has decided to alter the LTCG tax regime.

Any change to the tax framework would depend on government policy decisions. Its effect on foreign investment would also depend on factors such as market valuations, economic prospects, currency expectations and the availability of investment opportunities elsewhere.

Which Other Sectors Are Falling?

The market decline extended beyond IT stocks, indicating that selling pressure was relatively broad-based during the morning session.

• Nifty FMCG: Declined 1.92%.
• Nifty oil and gas: Fell 1.99%.
• Financial services: Traded lower.
• Private banks: Faced selling pressure.
• Metals and real estate: Traded in negative territory.

Pharmaceutical and healthcare shares were among the few areas showing relative strength. The Nifty Smallcap 100 was marginally higher, while the Nifty Midcap 100 fell 0.31%.

Different sectors can react differently to the same economic developments. Higher oil prices may hurt businesses with significant energy and transportation expenses, while concerns about interest rates and global growth can affect banks, technology companies and other industries through different channels.

The mixed performance across market segments also shows why investors should avoid interpreting a decline in the Sensex and Nifty as evidence that all listed companies face identical risks.

What Investors Should Watch Next

The direction of the market will depend partly on how the three key concerns develop during the coming sessions. Investors will be watching several indicators for signs of whether selling pressure is easing or intensifying.

• Federal Reserve policy signals: The decision and accompanying guidance could influence global interest-rate expectations, technology spending and investment flows.
• Crude oil prices: Developments in the Middle East and any evidence of actual supply disruption could determine whether oil prices remain elevated.
• Foreign portfolio flows: A slowdown in FPI selling or a return to net buying could improve demand for Indian equities.
• IT sector outlook: Investors will assess technology spending by US clients, contract demand and company-specific business updates.
• Inflation expectations: Changes in energy and commodity prices could influence the outlook for India’s inflation and monetary policy.

Investors should also distinguish between short-term market volatility and long-term business performance. A sharp decline in a stock does not automatically make it undervalued, just as a fall in the benchmark indices does not necessarily mean that every sector will continue to weaken.

Conclusion: Why Is the Stock Market Down Today?

The Sensex and Nifty fell sharply on Wednesday, October 28, as investors reacted to three main concerns: weakness in IT stocks ahead of the US Federal Reserve’s policy decision, crude oil prices rising above $115 per barrel and continued foreign portfolio investor selling.

At around 10:50 am, the Sensex was down 780.27 points at 72,818.40, while the Nifty had fallen 192.40 points to 22,556.80. IT stocks led the decline, while rising energy prices added to worries about inflation, the rupee and corporate profitability.

A sustained market recovery may depend on easing crude prices, improved global financial conditions and a stabilisation in foreign investment flows. However, the actual direction of equities will also depend on corporate earnings, domestic economic developments and changes in investor sentiment.

Disclaimer: The views, opinions, recommendations and suggestions expressed by experts and brokerages are their own and do not necessarily reflect the views of the publisher. This article is for informational purposes and is not investment advice. Investors should consult a qualified financial adviser before making investment or trading decisions.