Indian stock markets faced heavy selling on Wednesday, October 28, as the Sensex dropped nearly 800 points and the Nifty fell below 22,600. Investors were concerned about weakness in IT shares, rising crude oil prices and continued selling by foreign investors.
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, a decline of 192.40 points or 0.85%.
IT shares led the losses, with the Nifty IT index falling 3.21%. Infosys declined 4.66%, Mphasis dropped 4.86%, TCS fell 3.02%, Tech Mahindra lost 3.13% and HCLTech slipped 2.63%.
Selling pressure also affected other sectors. The Nifty FMCG index declined 1.92%, while oil and gas shares fell 1.99%. Financial services, private banks, metals and realty stocks also traded lower.
Pharmaceutical and healthcare shares were among the few sectors showing strength. The Nifty Smallcap 100 edged higher, while the Nifty Midcap 100 slipped 0.31%.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said market sentiment had weakened considerably, citing rising crude prices, geopolitical uncertainty and persistent selling by foreign portfolio investors (FPIs).
Here are the three main factors behind Wednesday’s market decline.
IT STOCKS SLIDE AHEAD OF US FED DECISION
The sharp decline in IT shares was one of the biggest factors dragging down the domestic market, as investors remained cautious ahead of the US Federal Reserve’s policy announcement later on Wednesday.
The main concern is the outlook for US interest rates. Investors are looking for indications of whether borrowing costs will remain high for an extended period or whether further increases could be considered if inflation stays elevated. Any signal pointing towards tighter monetary policy could weaken expectations for US economic growth and corporate spending.
This is particularly significant for Indian IT companies, as the US is a major market for their technology and consulting services. Their business relies heavily on American companies spending on software development, cloud migration, digital transformation, artificial intelligence and other technology projects.
When borrowing costs increase, businesses may become more cautious about expansion and discretionary expenditure. They might postpone technology investments, renegotiate contracts or take longer to approve new projects. Such decisions can slow deal closures and revenue growth for Indian IT service providers.
Consequently, investors are concerned not just about the Fed’s immediate decision but also about its guidance on the future direction of interest rates, which could influence corporate spending and demand for Indian IT services.
Selling affected companies across the sector during Wednesday’s trading session. At around 10.50 am, Infosys had fallen 4.66%, Mphasis was down 4.86%, TCS declined 3.02%, Tech Mahindra lost 3.13% and HCLTech slipped 2.63%. The Nifty IT index was lower by 3.21%.
The weakness also dragged down the broader Nifty MidSmall IT and Telecom index, which fell 1.92%.
However, the early market decline does not establish that concerns about the Fed are the only reason behind the sell-off. Rising oil prices and broader global risk aversion are also adding to the pressure on equities.
CRUDE OIL RISES ABOVE $115 AFTER FRESH ATTACK
Higher crude oil prices have further unsettled Indian markets. Brent crude was trading at $115.54 per barrel, up 1.46%, while US West Texas Intermediate (WTI) crude gained 1.47% to reach $101.37.
Oil prices opened approximately 1.3% higher after an attack on a Saudi Arabian refinery revived concerns about potential disruptions to energy supplies. The incident has increased the supply-risk premium in crude markets amid continuing geopolitical uncertainty in the Middle East.
Kaveri More, Commodity Technical Analyst at Choice Broking, said crude prices had climbed following the attack. At the time of her assessment, Brent was trading near $115.70 per barrel, while WTI was around $101.10.
In the domestic futures market, crude oil was trading at approximately Rs 9,630 on the Multi Commodity Exchange (MCX). More identified the Rs 9,470–Rs 9,340 range as the immediate support zone.
She said further price increases would depend on whether the disruption affected actual production or export volumes. An escalation could keep prices moving higher, while signs of easing supply concerns might prompt investors to book profits.
Rising oil prices pose a challenge for India because the country relies heavily on imported crude. A sustained increase can raise the import bill, put pressure on the rupee and intensify inflationary pressures. It can also push up transportation and input costs for businesses, potentially reducing profit margins.
Higher inflation could limit policymakers’ ability to ease monetary conditions, while uncertainty surrounding energy prices may weaken investor confidence and economic growth expectations.
Vijayakumar of Geojit Investments said Brent crude crossing $115 was negative for both the Indian economy and its stock market. He also pointed to reports suggesting that the US could launch fresh strikes on Iran after the US midterm elections, raising concerns about a further escalation in the region.
At around 10.50 am, the Nifty oil and gas index was down 1.99%, reflecting sectoral weakness amid the broader market decline.
FII SELLING CONTINUES; LTCG TAX CHANGES IN FOCUS
Continued selling by foreign portfolio investors is another significant concern for Indian equities. Foreign capital outflows can put downward pressure on share prices, especially when domestic investors cannot fully absorb the selling.
Vijayakumar said two developments would be important for a recovery in Indian stocks: crude oil prices must come down, and FPIs must halt their sustained selling and resume buying.
He also suggested that changes to the long-term capital gains (LTCG) tax regime might be necessary, arguing that continued foreign investor withdrawals were beginning to affect India’s otherwise strong macroeconomic fundamentals.
“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,” Vijayakumar said.
He further stated that changes to LTCG taxation appeared increasingly likely, citing foreign portfolio outflows of $19 billion in 2025 and $31 billion so far in 2026. According to him, these withdrawals had started to weigh on India’s otherwise favourable macroeconomic conditions.
The figures highlighted by Vijayakumar reflect the scale of foreign investor withdrawals that he believes are contributing to market weakness. In his assessment, changes to the tax structure could help improve the investment climate and encourage foreign capital to return.
However, the suggestion that LTCG tax changes may be required represents the expert’s assessment of a possible policy response. It does not confirm that the government intends to make any such changes.
