Indian equities fell for a second straight session on Tuesday as F&O expiry volatility combined with uncertainty over the Iran conflict, persistent FII selling, a weaker rupee, higher crude prices and elevated US Treasury yields. The Nifty fell 0.28% to 22,716.20, while the Sensex declined 242.65 points, or 0.33%, to 72,529.07.

The Nifty touched an intraday low of 22,569.65 before recovering some ground. Broader markets underperformed, with the Nifty Midcap index falling 0.6% and the Smallcap index declining 0.8%. Auto, IT and consumer durables stocks fell more than 1%, while media, metals and pharma gained.

The benchmark 6.94% 2036 government bond yield eased to 7.1628% from 7.1848% as banks bought ahead of the September quarter-end, supporting mark-to-market demand. Gains were limited by elevated crude prices and weak overseas cues. Shorter-tenure bonds also found support from banks seeking papers for held-to-maturity books.

The rupee ended nearly flat at 95.9800 per dollar, after briefly weakening beyond ₹96. Suspected RBI dollar sales around 96.15 level and about $500 million of equity rebalancing-related inflows helped boost dollar supply and pull USD/INR back below ₹96.

Top Movers of the Day
Azad Engineering shares surged 6.7% after Goldman Sachs maintained a Buy rating with a target price of 3,315 rupees.

Symbiotec Pharmalab gained 8% after the USFDA issued an Establishment Inspection Report for its Pithampur manufacturing facility.

Rays of Belief jumped 14% after reporting consolidated first-quarter profit of 28 million rupees, compared with a loss of 5 million rupees a year earlier.

Prasol Chemicals rose 10% after first-quarter profit surged 150.7% year on year to 610 million rupees.

Petronet LNG declined 2.5% after Jefferies maintained an Underperform rating with a target price of 240 rupees.

Pidilite Industries fell nearly 2% after entering into a strategic partnership with South Korea-based Hwaseung Chemical.

Allcargo Logistics shed 2% after Managing Director and CEO Ketan Kulkarni resigned.

Ola Electric declined nearly 1% after HSBC maintained a Reduce rating with a target price of 24 rupees.

Futures & Options
Nifty September 2026 futures settled at 22,715.20, a discount of 1 point to the Nifty 50’s cash close of 22,716.20. The index fell 64.05 points, or 0.28%. India VIX rose 2.32% to 13.32, signalling higher near-term volatility. HDFC Bank, Reliance Industries and Infosys were the most actively traded stock futures. Contracts expire on September 29, 2026.

Bonds
The yield on India’s benchmark 6.94%, 2036 government bond eased on Tuesday as banks’ traders bought ahead of the September quarter end, hoping for mark-to-market gains.  The yield on the benchmark 6.94%, 2036 government bond fell to 7.1628% at 1700 IST from 7.1848% on Monday.

The gains were, however, limited as elevated crude oil prices and negative overseas cues also weighed on sentiment. Some traders also covered short positions built over the past few sessions ahead of the quarter-end. Shorter-tenure bonds rose more as bank traders picked them up for their held-to-maturity books.

Forex
The Indian rupee ended at 95.9800 per US dollar, almost flat on Tuesday after briefly weakening beyond the Rs 96/$1 mark, with suspected Reserve Bank of India dollar sales and around $500 mln in equity rebalancing-related inflows helping reverse the early slide.

The rupee settled at Rs 95.9800 per US dollar compared with Monday's close of Rs 95.9825. In the interbank market, it opened at Rs 96.0550 per US dollar, weakened to an intraday low of Rs 96.1500, before recovering to a high of Rs 95.9525 per dollar,

The rupee initially came under pressure as month-end dollar demand emerged, but the currency recovered after the RBI was seen selling dollars around the Rs 96.15 per US dollar level. Equity index rebalancing flows of around $500 million later added to dollar supply and helped pull USD/INR back below 96 rupees.

US Treasury Notes
US Treasury note yields remained near multiyear highs on Monday, with the 10-year yield holding around 5.22% and the 30-year yield near 5.54%, following a broad global bond-market sell-off.

Oil prices hovered near $104 per barrel over uncertainties about US-Iran talks amidst the possible reopening of the Strait of Hormuz kept traders at bay. The two-year benchmark treasury yield was near 4.96%, the highest since May 2024, as the market looks to another possible rate hike by Federal Reserve in October meeting. 

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