Markets witnessed their steepest decline in two months on Monday, with the carnage most pronounced in small and mid-cap stocks as 527 companies hit 52-week lows while only 88 touched 52-week highs, highlighting the severity of the ongoing correction in the broader market despite benchmark indices scaling fresh peaks just a week ago.
The BSE Sensex plummeted 609.68 points or 0.71 per cent to close at 85,102.69, while the NSE Nifty tumbled 225.90 points or 0.86 per cent to settle at 25,960.55.
However, the pain was far worse in the broader market, with the Nifty Midcap 100 index crashing 1,106.50 points or 1.83 per cent to 59,488.10, and the Nifty Smallcap 100 index nosediving 456.10 points or 2.61 per cent to 17,051.65. The Nifty Next 50 suffered the steepest decline, plunging 1,407.35 points or 2.05 per cent to 67,302.50.
Market breadth turned decisively negative with only 950 stocks advancing against 3,348 declining on the BSE, while 187 remained unchanged out of 4,485 stocks traded.
Only three stocks from the Nifty50 pack managed to close in the green. Tech Mahindra led the gainers, rising 1.22 per cent to ₹1,590.00, followed by Wipro which gained 0.35 per cent to ₹260.83, and HCL Technologies which edged up 0.12 per cent to ₹1,685.00.
“Selling pressure was broad-based, with realty, defence, PSU banks, metals and FMCG stocks bearing the brunt of the decline. The correction was even more pronounced in the broader markets, where small-cap counters were hammered sharply, reflecting heightened risk aversion,” said Ponmudi R, CEO of Enrich Money.
The damage among the laggards was severe. IndiGo crashed 8.62 per cent to ₹4,907.50, marking the steepest decline among Nifty constituents.
Bharat Electronics fell 4.92 per cent to ₹386.90, JSW Steel tumbled 3.71 per cent to ₹1,119.10, Nestle India dropped 2.56 per cent to ₹1,215.00, and Shriram Finance declined 2.52 per cent to ₹833.35.
The broader Nifty 500 universe painted an even grimmer picture, with the median drawdown from 52-week highs standing at 19 per cent and the average at 20 per cent.
Nearly one in four stocks are now in meaningful drawdowns exceeding 30 per cent. Tejas Networks led the decliners with a 65 per cent fall from its peak, followed by Praj Industries down 64 per cent, and Ola Electric, Vedant Fashions, and Reliance Infrastructure each down 60 per cent from their respective highs.
“The slight outperformance of NSE 500 is due to the better earnings growth of midcaps over largecaps. While benchmark gauges have recovered steadily from their March lows, a majority of stocks within the broader universe continue to struggle,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments.
Sectoral indices witnessed uniform losses, with Nifty Realty plunging 3.5 per cent, Nifty PSU Bank falling 2.8 per cent, and Nifty Bank declining 538.65 points or 0.90 per cent to 59,238.55. Nifty Financial Services shed 194.75 points or 0.70 per cent to 27,687.15, while even the defensive Nifty IT index could not escape unscathed, falling 0.3 per cent.
“Sentiment weakened primarily due to rising caution ahead of the upcoming Fed meeting, with investors worried about the possibility of a tighter global monetary stance and its spillover impact on emerging markets. The sustained weakness in the rupee and continued FII outflows further aggravated concerns around inflation and import-cost pressures, adding to the bearish tone,” said Ajit Mishra, SVP Research at Religare Broking.
The Indian rupee depreciated to 90.11 against the US dollar, adding to investor concerns about import costs and inflation. Crude oil prices remained elevated, further weighing on sentiment, while the India VIX stayed relatively subdued despite the sharp market decline.
“On a cumulative basis, Call writers are carrying more than ₹28 crore of open interest, while Put writers stand at only ₹13.6 crore. Notably, today alone saw over ₹13.4 crore of fresh Call writing, clearly pointing to today fresh short positions being built at higher levels,” Ponmudi R noted, highlighting the bearish positioning in the derivatives market.
“From a technical standpoint, the retest of the crucial support zone near the 20-DEMA and the lower band of the rising channel around 25,900–25,950 has cast doubt on the strength of the recent recovery. Going ahead, the 25,800 level will act as the key make-or-break support; a breach below this zone may derail the recovery trend,” Mishra added.
Looking ahead, Gaurav Garg, Research Analyst at Lemonn Markets Desk, said investors remained cautious ahead of Wednesday’s US Federal Reserve policy announcement. “Persistent FII selling, influenced by uncertainty around the global rate-cut trajectory and soft cues from Asian markets, remained a key factor for domestic equities,” he said.
For the coming sessions, Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services, expects markets to remain volatile ahead of the US Fed policy outcome, with commentary on the interest-rate trajectory shaping global investor sentiment.
“On the domestic front, factors such as INR-USD movement, FII flow trends and the secondary-market liquidity environment amid elevated investor participation in primary markets are likely to influence the near-term market trajectory,” he said.
Published on December 8, 2025
