Sensex Crashes 600 Points: Amid a wave of global caution, relentless FII selling, a sharply weakened rupee and rising crude oil prices, Indian equity markets recorded one of their weakest sessions in months. Both benchmark indices slipped sharply on Monday, with heavy damage across mid- and small-cap segments, wiping out over Rs 7 lakh crore in investor wealth.
The market opened on a fragile note and selling intensified through the day as investors turned defensive ahead of the US Federal Reserve’s key policy decision on December 10. Broader markets bled deeper than benchmark indices, reflecting panic unwinding, stretched valuations, and liquidity-driven profit booking across several crowded pockets.
Key Takeaways: Why Sensex and Nifty Fell Sharply on December 8
- Sensex plunged 609 points and Nifty closed below 26,000 amid broad-based selling.
- Mid- and small-cap stocks saw sharper cuts, falling up to 2.6% as investors booked profits.
- Rupee weakened to 90.11 per dollar, adding pressure on FIIs to offload equities.
- Persistent foreign fund outflows continued for the seventh straight session.
- US Federal Reserve’s upcoming rate decision sparked extreme caution across global markets.
- Spike in Japanese bond yields raised fears of yen carry trade unwinding.
- India VIX jumped 7–8%, reflecting rising uncertainty and risk-off sentiment.
Market Overview: Frontline Indices Slip, Broader Markets Bleed Deeper
Indian equity benchmark indices extended their losses on Monday, turning sharply lower after a two-day recovery. The Sensex fell 609.68 points or 0.71% to close at 85,102.69, after hitting an intraday low of 84,875.59—a fall of 836 points from the previous session. The Nifty50 ended 225.90 points lower at 25,960.55, slipping to an intraday low of 25,892.25.
Broader markets significantly underperformed. The Nifty Midcap 100 index fell nearly 2%, while the Smallcap 100 index slipped 2.6%, marking its fifth straight session of decline. Some stocks in these pockets fell as much as 7%, highlighting the intensity of unwinding in leveraged and crowded positions.
Market breadth was decisively weak: 919 stocks advanced, 3,190 declined and 172 remained unchanged, indicating strong selling pressure across the board.
Major laggards included InterGlobe Aviation, Bharat Electronics, JSW Steel, Bajaj Finance, Trent and Adani Ports, several of which fell up to 7%. On the other hand, HDFC Life Insurance and Tech Mahindra emerged as rare gainers, rising around 1%.
US Fed Caution Triggers Market Nervousness
With the US Federal Reserve scheduled to begin its two-day meeting on December 9, traders preferred to reduce risk exposure. Concerns over the Fed potentially maintaining a hawkish tone, or surprising with a less dovish stance, influenced investor sentiment globally.
Devarsh Vakil of HDFC Securities noted that participants also awaited inflation releases and year-end adjustments. Several other central banks—including those in Australia, Brazil, Canada and Switzerland—are also meeting this week, adding to global policy uncertainty.
Ajit Mishra of Religare Broking said sentiment weakened largely due to growing caution around global monetary tightening and its spillover effects on emerging markets such as India.
Rupee Hits Fresh Lows, Adding to FII Exit Pressure
The Indian rupee continued its steep decline, touching 90.11 per dollar in early trade after opening at 90.07. Throughout the day, the currency remained under pressure due to higher crude oil prices, strong dollar demand from corporates and importers, and persistent FII withdrawals.
According to analysts, a falling rupee erodes foreign investors’ returns, prompting them to exit Indian equities to limit currency losses. This created a feedback loop where rupee weakness triggered more FII selling, intensifying market pressure.
Relentless FII Outflows Drag Markets Lower
Foreign institutional investors offloaded ₹438.90 crore worth of equities on Friday, marking the seventh consecutive session of net selling. December has already seen significant outflows, following heavy selling in November as well.
VK Vijayakumar of Geojit Investments highlighted that sustained rupee depreciation was forcing FIIs out of the market. He also pointed to the spike in Japanese bond yields, which increases the risk of yen carry trade unwinding—a potential trigger for further outflows from emerging markets.
Several analysts noted that valuations, particularly in mid- and small-cap segments, had become stretched after recent rallies, adding to volatility.
Heavy Sell-Off in Midcap and Smallcap Stocks
Broader markets took a much sharper hit as investors opted for safety and booked profits in riskier segments.
The Nifty Smallcap100 index fell more than 2% intraday and has now dropped over 4% in the past five sessions.
The Midcap100 index also slid nearly 2%.
Wealth1 CEO Naren Agarwal described the session as a “classic de-beta day”. While the Nifty slipped mildly, the brunt of the correction hit mid- and small-cap pockets due to leveraged positions, crowded themes and traders’ fear ahead of global rate decisions. Segments such as defence electronics, renewables and smaller industrial names saw exaggerated unwinding.
Crude Oil Prices Continue to Add Pressure
Brent crude rose 0.13% to $63.83 per barrel, hovering near two-week highs. Higher crude prices inflate India’s import bill and raise inflationary risks. This typically weakens sentiment in interest-sensitive sectors and increases caution across markets.
Volatility Surges as India VIX Jumps
India VIX, the volatility index, surged 7–8% to around 11–11.12, signalling heightened uncertainty.
A rising VIX often indicates nervousness among traders and a likelihood of sudden market swings.
Technical Indicators Turn Weak; Markets Enter Consolidation Zone
Technical readings signalled further caution.
Nilesh Jain of Centrum Broking observed that Nifty broke below its short-term 21-DMA around 26,000, turning it into immediate resistance.
Key technical observations included:
- Formation of a strong bearish candle on the daily chart.
- MACD generated a sell signal.
- RSI showed bearish divergence.
- Market likely to oscillate between 25,800–26,200 in the near term.
A Market Struggling Between Strong Fundamentals and Rising Global Risks
Despite Monday’s steep correction and volatility, analysts noted that India’s medium-term economic fundamentals remain strong. The economy posted a robust 8.2% GDP growth in Q2, and the RBI revised its FY26 GDP forecast to 7.3%.
Leading indicators suggest around 15% earnings growth in FY27 is achievable.
However, the near-term landscape is dominated by global headwinds:
- Currency weakness
- Foreign outflows
- Rising bond yields overseas
- Uncertainty around global monetary policies
- Higher crude oil prices
This push-and-pull dynamic is likely to keep markets volatile until clarity emerges from the US Federal Reserve and other global triggers.
Spiritual Insight: Inner Balance Through the Teachings of Saint Rampal Ji Maharaj
During periods of financial volatility, the unique knowledge of Saint Rampal Ji Maharaj offers a grounding perspective. His teachings remind individuals that market fluctuations are temporary, but inner stability comes from spiritual understanding.
By cultivating calmness, disciplined thinking and detachment from material highs and lows, one can navigate uncertainty with clarity. His guidance encourages people to focus on the deeper purpose of life, helping them remain balanced even when external conditions become unpredictable.
Market Outlook: A Fragile Path Amid Global Crosswinds
Monday’s sharp sell-off underscored a critical reality—markets are trapped between solid domestic fundamentals and intensifying global macro risks. With FIIs withdrawing money, the rupee hitting fresh lows, Japanese yields rising, and crude staying elevated, traders may remain cautious in the coming sessions.
As analysts widely agree, the near-term outlook appears volatile and range-bound, with sentiment likely to stabilise only after the US Fed provides clearer guidance on the trajectory of interest rates.
FAQs on Why the Indian Stock Market Fell on December 8
1. Why did the Sensex and Nifty fall on December 8?
Sensex and Nifty fell due to Fed uncertainty, persistent FII selling, rupee weakness, and rising crude oil prices, triggering broad profit-booking across sectors.
2. Why are FIIs selling Indian equities now?
FIIs are selling due to rupee depreciation, global risk-off sentiment, rising Japanese bond yields, and nervousness ahead of the US Federal Reserve meeting.
3. Why did midcap and smallcap stocks fall more than large caps?
Midcaps and smallcaps were overvalued and heavily leveraged, leading to sharper profit-booking and unwinding amid liquidity pressure and global uncertainty.
4. What role did the rupee’s decline play in the market crash?
The rupee’s fall to 90.11 per dollar eroded FII returns, increased import costs, and deepened selling pressure across equities.
5. Why is market volatility rising despite strong domestic fundamentals?
Global risks—Fed policy worries, yen carry trade concerns, FII outflows, crude prices, and currency weakness—are overshadowing India’s strong economic growth.
