Benchmark Indian equity indices reversed all early gains and ended sharply lower on Tuesday as firm oil prices, rising global bond yields and expectations of a US Federal Reserve rate hike weighed on risk appetite. The Sensex fell 1,433 points from its intraday high to close 1.93% lower at 74,004, while the Nifty50 tumbled more than 474 points from its day’s high to end at 23,118.60, marking an intraday decline of nearly 2% for both benchmarks.

The sell-off wiped out more than ₹9 trillion from the market capitalisation of BSE-listed companies, which fell to around ₹472 trillion. The Nifty IT index jumped 5% and outperformed all sectoral indices, supported by gains in technology stocks. Tata Consultancy Services entered a long-term strategic partnership with Aareal Bank to transform the lender’s technology operations through an AI-powered, cloud-first model. Nifty Realty declined the most, while Bharat Electronics, Shriram Finance and Adani Enterprises were among the biggest Nifty 50 losers. The Nifty MidCap and SmallCap indices fell 1.67% and 2.07%, respectively. The India VIX rose 10.33% to 13.57, signalling higher expectations of near-term volatility.

The Indian rupee fell to an over one-month low but held above 96 per US dollar as likely Reserve Bank of India intervention limited losses triggered by surging oil prices and expectations of a rate hike in the US this week. The rupee settled at 95.9550 per US dollar, down 0.42% on the day and marking its sharpest single-day fall since mid-July.

Indian government bonds ended sharply lower on thin volumes after the RBI announced OMO sales to absorb excess liquidity. Traders added short positions in five- to 10-year bonds, expecting further curve flattening. The 6.36%, 2031 bond yield rose 17.8 bps to 6.7914%, while the 10-year benchmark yield climbed 4.94 bps to 7.0727%, its highest since May 22.

Top Movers of the Day

Tata Chemicals hit the 20% upper circuit at ₹734.90 after the group announced a strategic restructuring involving Tata Investment Corporation acquiring a controlling stake in Tata Chemicals and Tata Chemicals buying Tata Consumer Products’ India staples business. The proposed transactions prompted heavy buying.

Tata Investment Corporation surged 9.85% to ₹715, riding the same restructuring announcement and expectations of potential value unlocking from the proposed consolidation.

Davangere Sugar rose 7.14% to ₹2.25, with volumes exceeding 10 times the five-day average. The stock benefited from continued interest in sugar-related counters and themes around cane pricing and ethanol blending.

Zensar Technologies gained 4.17% to ₹451.30 amid broad-based buying in mid-cap IT stocks following the sector’s recent correction and easing concerns about artificial intelligence disrupting legacy IT services immediately.

Pranav Constructions made a strong market debut, listing at ₹165 on the NSE, up 33.06% from its 124-rupee issue price. The stock listed at ₹162 on the BSE, a 30.65% premium, after the IPO was subscribed around 122 times.

HDFC Bank gained 1.18% to ₹716.60 on reports that the lender had shortlisted internal candidates for the chief executive role. A block deal involving around 1.62 million shares also supported trading activity, although the stock later pared some gains.

IDBI Bank fell 0.5% to ₹83 amid investor concerns over valuation gaps on Fairfax’s offer of 81 rupees per share fell below market expectations and more than 17.6 million shares changing hands, amid continued concerns over its privatisation process.

PNC Infratech plunged 20% to ₹140.32 after NHAI and MoRTH barred the company from new project tenders for three years. PNC Infratech fall was also triggered by structural distress on Kanpur-Lucknow expressway package-II.

Solar Industries India fell 13.75% to ₹19,225 due to investor concerns on funding and financial leverage required for its ₹129.51 billion all cash acquisition of Omnia Holdings.

Mishra Dhatu Nigam declined 9.28% to ₹405.90 following its recent rally linked to defence-procurement approvals worth around ₹1.1 trillion. The stock faced profit-booking and faded deal expectations of India-Russia defence pact announcements during the BRICS summit.

Futures & Options
The Nifty September 2026 futures closed at 23,220, a premium of 101.40 points over the Nifty 50’s cash-market close of 23,118.60. The Nifty 50 fell 279.50 points, or 1.19%, during the session, while the NSE’s India VIX, a gauge of expected near-term volatility, rose 7.99% to 13.27.

HDFC Bank, Infosys and LIC Housing Finance were the most-traded individual stock futures contracts on the NSE. The September 2026 F&O contracts will expire on 29 September 2026.

Bonds
Indian government bonds ended sharply lower on Tuesday amid thin volumes after the Reserve Bank of India announced OMO sales to absorb surplus liquidity. The move prompted traders to add short positions in five- to 10-year bonds, with some expecting further flattening of the yield curve.

Shorter-duration papers underperformed as investors shifted towards longer-tenure bonds. The 6.36% 2031 bond yield climbed as much as 17.8 bps during the session before closing at 6.7914%, compared with the previous close.

Longer-duration bonds saw relatively smaller losses as traders increased positions amid expectations that the RBI could consider a rate hike at its October policy review.

The benchmark 6.94%, 2036 bond yield rose to 7.0727% from 7.0233%, its highest level since May 22. The RBI’s liquidity measures and expectations of tighter monetary policy remained the key drivers of market sentiment.

Forex
The Indian rupee fell to its weakest level in more than a month on Tuesday but held above 96 per US dollar as likely Reserve Bank of India intervention limited losses driven by surging oil prices and expectations of a US rate hike this week. The rupee settled at 95.9550 per US dollar, down 0.42% on the day, marking its biggest single-day fall since mid-July.

Brent crude rose more than 2% to $108.20 a barrel, raising concerns over a wider Indian trade deficit and higher inflation. India’s goods trade deficit narrowed to $26.8 billion in August, below economists’ expectations of around $32 billion, largely due to a decline in gold imports. Meanwhile, signs of broadening inflation have prompted traders to increase bets on a Reserve Bank of India rate hike next month.

Crypto
The cryptocurrency markets remained range-bound on Tuesday as traders reduced risk ahead of key regulatory and macroeconomic events. Bitcoin traded between support near $76,000 and resistance around $78,000, finding temporary footing near $76,900 after retreating from a multi-week high above $81,000. Ethereum remained under pressure, trading below $2,500 in the $2,465–$2,480 range as momentum indicators weakened.

Market sentiment was clouded by uncertainty surrounding the US Senate’s expected cloture vote on the Clarity Act, a major crypto-market bill that could reshape stablecoin regulation and broader industry operations in the US. Rising energy prices added to the pressure, with Brent crude above $109 a barrel following geopolitical disruptions to pipeline infrastructure. Markets were also pricing an 86.5% probability of a Federal Reserve rate hike on Wednesday, further limiting appetite for riskier assets.

US Stock Futures
US stock futures fell early Tuesday as investors looked ahead to the Federal Reserve's policy decision later this week, while rising Treasury yields continued to weigh on risk appetite. S&P 500 futures declined 0.49%, Dow futures fell 0.66% and Nasdaq-100 futures lost 0.48%. In Monday's regular session, the Dow fell 0.3%, the S&P 500 declined 0.5% and the Nasdaq Composite slipped 0.6%.

Oil prices extended gains after Saudi Arabia shut a key pipeline bypassing the Strait of Hormuz. Brent crude futures rose 1.8% to $107.55 a barrel, while WTI futures gained nearly 2% to $103.36.

US Treasury Notes
US Treasury note yields surged early Tuesday, with the benchmark 10-year yield rising 8 basis points to 5.041%, its highest level since 2007. The benchmark US 10-year paper is trading around 5.018% currently. The yield briefly crossed the psychologically important 5% threshold as investors assessed the inflation risks from crude oil prices above $100 a barrel and the potential economic impact of the ongoing US-Iran conflict.

The two-year Treasury yield also climbed to around 4.66% as markets repriced interest-rate expectations ahead of the Federal Reserve's policy decision on Wednesday. The global bond sell-off has intensified pressure on equity markets and raised concerns over higher borrowing costs for consumers and businesses.

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