Sensex hits a three-year low amid rising crude prices, reaction to RBI policy

The benchmark index Nifty 50 closed at its lowest level since 18 months on Thursday, while the BSE Sensex dropped 1.4%, to its lowest level since February 13, 2024. The Nifty stocks index closed at 22,231.80 points, down 1.6%, while Sensex closed at 71,593.24 points.

Market analysts suggest multiple factors including rising global crude oil prices, persistent decline in the rupee, and cautionary onset of Q2 (July-September) earnings season contributed to the market’s movement.

Thursday’s (October 8, 2026) fall followed a sharp reaction by the markets on Wednesday (October 7, 2026) to the Reserve Bank of India’s (RBI) Monetary Policy Committee’s (MPC) decision to hike interest rates by 5 bps and change its stance, with the rupee dropping as low as 96.85 per dollar and the stock indices declining from 1.4%-1.6%.

Expect further fall

“During the session, the Nifty breached the previous swing-low support at 22,217 as well as the key April 2026 swing low of 22,182,” Nandish Shah, deputy vice president, HDFC Securities said in a report. “The decisive breakdown of these levels indicates a further escalation in selling pressure and an intensification of the ongoing downtrend.”

Ajit Mishra, senior vice-president of research at Religare Broking added that the market recovery that occurred between April and August is over now and that the market will likely fall further.

“For our markets, the factors are mixed including crude at $103 per barrel, rupee near 97 per dollar and caution ahead of earnings season,” Mr. Mishra said. According to him, in the near-term, the Nifty 50’s immediate support range is seen between 21,700 to 22,000.

Oil prices rose 4% on Thursday (October 8, 2026) following no signs of easing in the West Asia conflict and on worries over supply from the region amid increasing attacks on shipping. Brent crude futures rose $4.14 to $102.28 per barrel while the West Texas Intermediate (WTI) crude futures rose $3.71 to $91.99 per barrel.

Carryover from day before

The domestic market extended the losses from Wednesday (October 7, 2026) following worries over uncertainty about the tightening domestic and global monetary conditions.

Though the markets priced in the 25 basis points rate hike by the MPC, what surprised them was the change in policy stance to ‘calibrated tightening’ from neutral, leaving markets unsure of how much the rates will be hiked going forward and for how long.

“Looking ahead, the market focus shifts to the Q2 earnings season, where management commentary on demand sustainability and input cost absorption will provide critical near-term direction,” Vinod Nair, head of research, at Geojit Investments Limited said in a note. 

Meanwhile, Asian markets too traded lower on Thursday (October 8, 2026) as global investors amid increased risk-averse appetite to rising crude prices and elevated U.S. Treasury yields. Japan’s Nikkei 225 fell nearly 1.13% while South Korea’s KOSPI declined 2.26%. Hang Seng was down 1.4%.