The Indian equity market witnessed a broad-based sell-off on Tuesday, December 16, with benchmark indices closing sharply lower. Persistent foreign fund outflows, a weakening rupee that hit a new historic low, and a lack of positive domestic cues combined to dampen investor sentiment across the board.
Market Indices and Sectoral Performance
The session ended with the Sensex falling 0.54% to 84,754 and the Nifty 50 declining 0.56% to 25,822. The sell-off was not limited to large caps; broader markets also felt the pressure. Both the Nifty Midcap 100 and Nifty Smallcap 100 indices dropped over 0.70% each.
On the sectoral front, the pain was almost universal. Nifty Realty was the worst performer, tumbling 1.20%. Key indices like Nifty Bank, Nifty Oil & Gas, and Nifty Pharma all closed with losses exceeding 0.50%. The only sector to defy the negative trend was Nifty Consumer Durables, which managed a modest gain of 0.60%.
Rupee Breaches Historic 91 Mark Against Dollar
A major factor unsettling the markets was the continued slide in the Indian currency. The rupee breached the psychologically crucial level of 91 against the US dollar for the first time ever, touching a new historic low of 91.07. This depreciation occurred despite data showing the country's trade deficit had narrowed to a five-month low.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, commented on the global backdrop, noting, "The weakening of the AI trade continues in the US. Chances are that at some point in 2026, the AI trade will weaken significantly, facilitating capital flows into EMs like India." He emphasized that for a sustained market recovery, earnings growth is essential and that upcoming Q3 results will be crucial for direction.
Stocks That Faced Maximum Selling Pressure
OLA Electric topped the list of losers, with its shares plunging 7% to ₹34.8, snapping a three-day winning streak. PB Fintech (Policybazaar) shares also dropped sharply by 5.4% to ₹1,822.4. Reports suggesting potential regulatory changes to cap insurance agent commissions, as per the proposed Insurance Bill 2025, weighed on the stock.
Banking heavyweight Axis Bank fell 5% to hit a two-month low of ₹1,218 after its management indicated continued pressure on Net Interest Margins (NIM) for the third quarter. The sell-off extended to new-age technology companies, with Eternal, Swiggy, Nykaa, and Paytm losing between 2% and 4.4%.
Metal and defence stocks were not spared either. Hindustan Copper led metal stocks lower with a 3% fall, followed by peers like SAIL and JSW Steel. In the defence sector, Bharat Dynamics crashed 3.6%, while Garden Reach Shipbuilders and Solar Industries India also declined.
What Investors Are Watching Next
Market participants are now turning their attention to key US economic data releases, which were delayed due to a previous government shutdown. The November nonfarm payrolls and October retail sales figures are due, along with the November Consumer Price Index later in the week. These numbers will be critical in shaping global risk appetite and, consequently, flows into emerging markets like India.
