Indian equity benchmarks opened lower on Thursday, 1 October 2026, extending a weak run after September proved to be the market's worst month since March. Investors stayed cautious ahead of a three-day trading break, with markets closed on Friday for Gandhi Jayanti.
In early trade, the S&P BSE Sensex fell 224.87 points, or 0.31%, to 72,255.42, while the NSE Nifty 50 dropped 93.85 points, or 0.41%, to 22,526.60.
A bruising September
The new month began on the back foot after a difficult September. The Nifty 50 fell about 6% during the month and the Sensex lost 5.82%, the steepest monthly decline since March, when the indices recorded double-digit losses.
On Wednesday, 30 September, the last trading day of the month and of the July–September quarter, the Nifty fell 0.42% to close at 22,620.45, while the Sensex slipped just 0.07%, or 48.78 points, to 72,480.29. The Nifty remained below the 23,000 mark for a third consecutive session, a level that traders had treated as an important technical support.
The two benchmarks have diverged more often in recent months, partly because of a revised closing auction mechanism for stocks in the futures and options segment, which has changed how end-of-day prices are set for some large stocks.
Wednesday's session showed a mixed picture beneath the headline indices. Realty, cement, chemicals, private banks and public sector banks closed higher, while pharmaceuticals, metals, consumer durables and fast-moving consumer goods stocks declined. The broader market was more resilient: both the Nifty Midcap 100 and Nifty Smallcap 100 indices ended higher, breaking their recent losing streak.
Oil is the main worry
The biggest pressure on Indian markets has come from crude oil. Brent crude rose towards $97 a barrel at the end of September, a monthly gain of more than 7%, as uncertainty over negotiations between the United States and Iran kept supply concerns in focus.
India imports most of the oil it consumes, so higher prices feed directly into the trade deficit, put pressure on the rupee and can push up inflation. Sectors such as oil marketing, paints, aviation, chemicals and consumer goods are especially sensitive to crude prices because they affect input costs.
Profit-taking at higher levels also weighed on stocks, as investors who had benefited from earlier gains locked in profits ahead of the quarter-end.
Global cues were mixed
Asian markets offered limited direction. On Wednesday, Japan's Nikkei 225 gained 1.9%, Australia's S&P/ASX 200 rose 0.9% and Hong Kong's Hang Seng added 0.4%, while South Korea's Kospi slipped 0.5%.
On Wall Street, the S&P 500 fell 0.3% to 7,651.54 on Wednesday after giving up early gains, and the Dow Jones Industrial Average lost 0.9%, while the Nasdaq Composite edged up 0.2%. US Treasury yields remained elevated after data showed the US economy was stronger earlier in the year than previously thought, reinforcing expectations that the Federal Reserve could raise interest rates again before year-end.
Technology stocks offered some support globally after memory chipmaker Micron reported quarterly revenue of $54.23 billion, well above expectations, and guided to about $61.5 billion for the current quarter, underlining the strength of AI-related demand.
The RBI decision is next
Domestically, attention is turning to the Reserve Bank of India's next monetary policy decision, scheduled for 7 October. The RBI has held its repo rate at 5.25% at recent meetings, keeping a neutral stance while monitoring inflation risks from oil prices, the weaker rupee and the possibility of adverse weather. Some economists expect the central bank to begin raising rates later this year, although views differ on the timing.
An unexpected move would have significant implications for rate-sensitive sectors such as banking, real estate and automobiles. Bond markets will also react quickly, since higher policy rates would raise borrowing costs for the government and companies alike.
IPO market stays active
Despite the weak indices, the primary market showed signs of strength. Fintech lender Moneyview listed on 1 October at a premium of more than 60% to its ₹34 issue price, while renewable energy company Inox Clean Energy filed draft papers for a ₹10,000 crore IPO on 30 September. The contrast suggests that investor appetite for selected new issues remains strong, even as broader market sentiment is fragile.
New-age technology stocks have also held up better than the benchmarks. Inc42's New Age Tech Index rose 3.38% between 1 July and 25 September, outperforming the Nifty 50 by around seven percentage points.
A test for India's domestic investors
One of the important features of India's market in recent years has been the growing weight of domestic investors. Monthly inflows into equity mutual funds through systematic investment plans have provided a steady source of buying even when foreign portfolio investors have been net sellers. That support has softened the impact of global sell-offs and helped absorb large stake sales by private equity funds and promoters.
September's decline will test the patience of this new generation of retail investors, many of whom began investing during the strong rally that followed the pandemic and have had limited experience of sustained market falls. Continued inflows through the current correction would reinforce the view that Indian equity markets now have a more stable domestic foundation. A sharp slowdown in SIP contributions, by contrast, would remove one of the key supports that has kept volatility in check.
Traders reduce risk ahead of the break
With markets closed on Friday and over the weekend, many traders were expected to reduce leveraged positions on Thursday to avoid exposure to any global developments during the three-day break. Brokerages have flagged cautious positioning at the start of the new derivatives series.
The coming weeks will bring corporate results for the July–September quarter, which could shift attention from macroeconomic worries to company fundamentals. Investors will watch for signs of rural demand recovery, the impact of higher fuel costs on margins and the health of bank loan books.
Analysts will also be watching the rupee and foreign portfolio flows closely when trading resumes next week.
For now, the market's direction depends heavily on oil prices and global risk sentiment. A sustained fall in crude could provide relief; a further rise would likely keep Indian equities under pressure as October gets under way.
