Indian markets extended their slump for a second straight day on Tuesday, with the Sensex tumbling over 700 points and the Nifty sliding more than 200 as investor nerves intensified ahead of the U.S. Federal Reserve’s upcoming policy decision. The Sensex slipped below 84,400 and the Nifty fell under 25,750, marking their sharpest decline in more than two months. Weak risk appetite, persistent foreign selling, and a weakening rupee added to the pressure.
Fed worries:
Investors are anxiously awaiting the Fed’s December 10 announcement. While a 25-basis-point cut is largely priced in, markets fear an unexpected pause that could strengthen the U.S. dollar and further strain emerging markets like India. Global caution also stems from several central bank decisions due this week, including the RBA, SNB, and Bank of Canada, all expected to hold rates. As Wall Street reduces expectations for 2026 U.S. rate cuts, Asian markets also weakened, with the Nikkei down 0.08%, Kospi off 0.58%, and MSCI Asia ex-Japan declining 0.28%.
FII selling:
Foreign investors offloaded ₹656 crore worth of equities on December 8, taking monthly outflows past ₹6,600 crore, even as domestic institutions bought ₹2,542 crore. A falling rupee — which touched 90.15 per dollar — and rising Japanese yields contributed to volatility. Expiry-related swings in Nifty derivatives further unsettled sentiment, while a weaker currency threatens higher import-led inflation.
