The Indian stock market has come under sudden pressure, with the Sensex losing nearly 1,300 points in just two trading sessions. The benchmark index closed at 84,666.28 on December 9, 2025, falling 436 points on that day alone, after an even sharper decline the previous session. This two-day slide has raised fresh concerns about what is driving the sudden weakness in an otherwise strong long-term market. Several global and domestic factors have combined to push the index downward, creating a wave of uncertainty among investors.
A major reason behind the Sensex drop has been strong selling by foreign portfolio investors. Reports showed heavy FPI outflows on December 9, with overseas investors pulling out tens of billions of rupees in a single trading session. These withdrawals added to the month’s overall negative flow, showing a clear trend of foreign investors reducing exposure to Indian equities.
Foreign investors have been key drivers of India’s long rally, so a sudden reversal in their stance immediately affects liquidity and sentiment. When FPIs sell aggressively, the market feels the pressure across multiple sectors. Domestic institutions and retail investors attempted to absorb some of the selling, but the volume of exits was large enough to push the index significantly lower over both trading sessions.
The broader global environment has become more cautious, and this has spilled over into Indian markets. Investors worldwide are waiting for a major policy decision from the U.S. Federal Reserve. Movements in U.S. interest rates have a deep impact on emerging markets because they influence global liquidity, currency flows, and risk appetite.
Ahead of the Fed meeting, U.S. Treasury yields and the dollar strengthened, which typically makes emerging-market assets less attractive. When global investors prefer safer or higher-yielding assets in developed markets, they often reduce their positions in countries like India. This shift contributed to the Sensex fall, as global funds adjusted portfolios in anticipation of potential rate changes.
Concerns about international trade relations intensified market anxiety. Reports pointed to possible tensions between India and the United States involving tariff-related issues in specific product categories. Worries about trade disputes tend to hurt sectors that depend on global demand, as well as industries sensitive to imported inputs.
These headlines triggered fresh selling in export-oriented and consumption-linked sectors. Even though no immediate policy changes were announced, the possibility of escalating trade friction made investors cautious. This caution further added to the sell-off already underway due to foreign outflows and global uncertainty.
The fall in the Sensex was not evenly spread across the market. Large-cap stocks, especially in information technology and financial services, saw some of the sharpest declines. Major IT companies faced notable pressure, with Tata Consultancy Services among the significant losers during the session in which the Sensex fell 436 points. Weakness in global technology spending outlooks, currency movements, and profit-taking contributed to the decline in tech stocks.
Financial stocks, which have a large weight in the index, also retreated as global risk sentiment weakened. When heavyweight sectors correct strongly, the overall index tends to fall quickly, which is exactly what happened during the two volatile sessions.
Interestingly, mid-cap and small-cap stocks did not fall as sharply. Some segments even saw selective buying, showing that the correction was concentrated mainly in index-heavy sectors rather than in the broader market.
The movement of the Indian rupee added another layer of pressure. A weakening rupee, combined with a stronger U.S. dollar, makes India less attractive to global investors in the short term. A weaker currency also raises hedging costs for companies with foreign loans or import-heavy operations.
Shifts in bond yields and changes in liquidity conditions also influenced market behaviour. When bond markets become volatile or interest rates rise, some investors move capital away from equities to rebalance portfolios. During the two-day slump, these liquidity adjustments magnified the selling pressure on the Sensex.
Although domestic mutual funds have remained reasonably strong buyers, the scale of foreign selling was too large for local inflows to completely neutralize.
The near-term outlook suggests that volatility may continue until major global events settle. The upcoming U.S. Federal Reserve decision will play a crucial role in shaping global risk sentiment. Any surprise on the interest-rate front has the potential to move markets sharply.
Trade negotiations and updates on global economic growth will also influence market direction. If foreign investor flows stabilize and domestic corporate earnings remain strong, the correction may stay limited and create fresh buying opportunities. However, if global risk aversion intensifies or trade tensions escalate further, the downward trend could extend.
Market commentators noted that Indian equities are currently highly sensitive to foreign flows and global monetary signals. This means external factors may dominate market movements in the immediate future.
The Indian market’s two-day fall reflects a mix of foreign selling, global policy uncertainty, trade worries, sector-specific weakness, and currency pressure. Although the Sensex lost nearly 1,300 points, the broader market did not collapse, suggesting the decline is driven more by sentiment and flows than by fundamental deterioration. Continued observation of foreign flows, policy decisions, and global economic trends will help determine whether this decline remains a short correction or develops into a deeper consolidation phase.
The latest confirmed figures show the BSE Sensex closed at 84,666.28 on December 9, 2025, down 436.41 points, taking total two-day losses close to 1,300 points.