The Indian stock market selloff intensified on Thursday as a toxic mix of surging bond yields, elevated crude oil prices, a weaker rupee and mounting expectations of higher US interest rates rattled investors. The pressure was amplified by aggressive selling in banking, financial services and insurance stocks following proposed changes to insurance commission rules by the regulator.
The BSE Sensex tumbled 1,264 points, or 1.54%, to hit an intraday low of 73,563.92, while the Nifty 50 dropped 369 points, or 1.57%, to 23,046.15. Sensex ended 1248 points or 1.67% lower at 73,580.54 while, broader Nifty 50 settled the day down 383.70 points or 1.6% at 23,063.10.
The broad-based selloff also erased nearly ₹5 lakh crore of investor wealth in a single session. The total market capitalisation of companies listed on the BSE fell to ₹480.99 lakh crore, from ₹485 lakh crore in the previous session.
Most sectoral indices were trading sharply lower, with pharma being the only exception. Banking and financial services stocks emerged as the biggest drags on the benchmarks after the Insurance Regulatory and Development Authority of India (IRDAI) has questioned the current economics of bank-led insurance distribution, particularly the level of remuneration paid to banks under multiple tie-up arrangements.
“The sharp spike in Brent crude above $102 and the US 10-year bond yield rising to 5.11% will weigh on the market today. So long as these two global headwinds remain, the prospects of a smart recovery in the market appear remote,” said Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments.
Top Losers Today
On Sensex, Bajaj Finance was the top loser, down around 6% followed y Axis Bank, Bajaj Finserv, IndiGo and Trend. ICICI Bank was the only stock in the green. Meanwhile, on Nifty Bajaj Finance, HDFC Life, Axis Bank, IndusInd Bank and Bajaj Finserv lost the most.
The selling hit several heavyweight financial stocks. HDFC Life, Bajaj Finance, Axis Bank and Bajaj Finserv were among the biggest losers in the Nifty 50 pack, with losses of as much as 8.5%.
The sector’s weakness had an outsized impact on the benchmark because banking and financial services stocks carry the highest weightage in the Nifty 50.
Financial and insurance stocks continued to bleed after IRDAI proposed tighter caps on commissions and distribution payouts. PB Fintech (Policybazaar) plunged a staggering 28%-30% intraday, while heavyweight names including Axis Bank, Bajaj Finance and Bajaj Finserv fell around 3%-5%.
Here’s what’s behind the stock market crash today:
1. Bond yields spike
Global bond yields surged sharply, triggering fresh concerns among equity investors and reducing the relative attractiveness of riskier assets.
The US 10-year Treasury yield held at 5.11% during Asian trading after climbing 15 basis points in the previous session. The move took the yield to its highest level since 2007.
Japanese government bond yields also moved higher, with the yield rising 8 basis points to 3.06%, its highest level since August 1996.
The sharp increase in US yields came after data showed that US business activity accelerated to a more-than-five-year high in September. The interest-rate-sensitive 2-year Treasury yield briefly crossed 4.9%, reaching its highest level since May 2024.
The benchmark 10-year Treasury yield jumped 13.89 basis points to 5.106%, marking its highest level since 2007. It was also the yield’s biggest single-day increase since April 2025.
Higher bond yields typically diminish the appeal of emerging-market equities such as Indian stocks, adding another layer of pressure to domestic markets.
2. Oil prices remain elevated
Crude oil prices softened marginally during Thursday’s trade but continued to remain above the psychologically important $102-per-barrel level.
Brent crude futures had already jumped 4% in the previous session, as Iran and the United States remained at odds over efforts to end their war. According to a Reuters report, Iran’s president told the United Nations General Assembly that Tehran would never surrender to US pressure.
Concerns surrounding the strategically important Strait of Hormuz also continued to keep oil markets on edge. Earlier on Wednesday, Iran’s security chief Mohsen Rezaei said the Strait of Hormuz would remain closed until Iran’s conditions were met.
US Secretary of State Marco Rubio, meanwhile, said on Wednesday that reaching a deal with Iran would require hard work over a period of time. He also said US President Donald Trump had military options.
3. Rupee tumbles
The Indian rupee came under additional pressure as higher crude prices and rising global bond yields weighed on the currency.
The rupee fell 14 paise to 95.87 against the US dollar in early trade.
“The rupee continues to hover in the 95.60-95.95 zone, with persistent FII selling in Indian markets keeping sentiment cautious. Going ahead, US-Iran developments, Xi Jinping’s US visit and UN meeting updates could keep currency markets volatile,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
4. Fed hike bets rise
Expectations of another US Federal Reserve rate hike have also increased, adding to the pressure on global equities.
US Fed officials maintained a hawkish tone as rising crude oil prices added to inflationary concerns. Federal Reserve Governor Michael Barr said on Wednesday that the central bank’s recent rate hike was aimed at recalibrating borrowing costs and indicated that further increases could be necessary, according to a Reuters report.
The CME FedWatch tool now indicates a 69% probability of a Fed hike at the next meeting, sharply higher than the 44% probability recorded a month earlier.
5. Banks & financials drag
Banking and financial stocks came under intense selling pressure after the Insurance Regulatory and Development Authority of India (IRDAI) proposed sweeping changes to insurance commission rules.
The proposed framework seeks to cap commission payouts, link them to product complexity and extend life insurers’ commission payments beyond the first year of a policy.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
About The Author
