Nifty Slips 150 Points: FII Selling, RBI Policy Weigh on Markets

Nifty 50 reversed its early gains on October 12, with profit booking, persistent foreign selling, higher bond yields and tighter monetary conditions weighing on sentiment despite a stronger rupee and softer crude oil prices.

The Indian equity market started Monday on a positive note but quickly reversed course as selling pressure emerged in heavyweight stocks. At 11:47 am IST on October 12, 2026, the Nifty 50 was at 22,368.25, down 152.20 points or 0.68 per cent, after touching an Intraday high of 22,651.10 and a low of 22,360.65.

The reversal comes just one trading session after the benchmark gained 288.65 points, or 1.30 per cent, on Friday and ended its eight-week losing streak. 

Profit Booking After Friday’s Sharp Recovery

The Nifty had risen 1.30 per cent on Friday to close at 22,520.45, while the Sensex gained 1.23 per cent. The rebound followed a sharp selloff earlier in the week and came as investors covered short positions and bought beaten-down stocks. 

The Nifty initially extended that momentum on Monday, opening at 22,593.20 and climbing to 22,651.10. However, selling emerged at higher levels and the index subsequently slipped below Friday's close.

This suggests that some investors are using the recent rebound to book profits, particularly after the index remained under pressure for several weeks.

Foreign Investor Selling Remains a Major Headwind

Foreign investors sold Rs 45,125.67 crore of Indian equities during the first six trading sessions of October, according to market data reported on Monday. This followed net selling of Rs 45,536.89 crore in September.

The selling trend was also visible during the previous trading week. FIIs sold around Rs 30,294 crore between October 5 and October 9, while domestic institutional investors bought around Rs 30,313 crore, providing some cushion to the market. 

The pressure on foreign flows is linked to several factors, including elevated crude oil prices, high US bond yields and currency concerns. The combination can make Indian equities relatively less attractive to overseas investors compared with other markets and fixed-income assets.

Rising Bond Yields and a Tighter RBI Policy

The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 per cent on October 7, marking its first rate increase since February 2023. The central bank also shifted its policy stance from neutral to calibrated tightening. 

The RBI subsequently raised the minimum daily CRR maintenance requirement for banks from 90 per cent to 99 per cent of the prescribed requirement, effective from the fortnight beginning October 16. The overall CRR itself remains at 3 per cent. 

At the same time, the Indian 10-year government bond yield ended Friday at 7.2994 per cent, marking its eighth consecutive weekly increase. Reuters reported that the yield had risen 45 basis points over the previous eight weeks and was approaching the 7.35 per cent level. 

Higher bond yields can put pressure on equity valuations as the return available from relatively safer assets increases. They can also weigh on rate-sensitive sectors and raise financing costs.

Banking Stocks Face Pressure

The RBI's tighter liquidity measures and elevated bond yields are particularly relevant for banks.

The Nifty Bank index was showing weakness in morning trade after reversing an early gain. SBI, ICICI Bank and Axis Bank were among the banking stocks facing selling pressure. The Nifty Bank index was down around 0.36 per cent at 10:42 am, according to market data reported by Moneycontrol.

Banking stocks carry significant weight in the Nifty 50. Therefore, weakness in large financial stocks can have a noticeable impact on the benchmark even when other parts of the market remain relatively resilient.

The broader market was also showing comparatively better resilience earlier in the session, with mid-cap and Small-Cap indices trading higher even as the Nifty and Sensex turned lower. 

Crude Is Lower, But Still Above USD 100

Crude oil prices have eased, which should normally provide some relief to India because the country is heavily dependent on imported crude.

Brent crude fell around 1.2 per cent to about USD 103.50 a barrel in early Asian trade on Monday. The decline followed expectations of increased energy supplies after an announced Russia-Ukraine energy ceasefire. However, continuing tensions in the Middle East have kept crude prices above the USD 100 level. 

Therefore, lower crude prices are providing some support, but the absolute price remains elevated. Expensive crude can increase India's import bill, put pressure on the rupee and add to inflation risks.

Disclaimer: The article is for informational purposes only and not investment advice.