Nifty Faces Worst Year Since 2011 As Foreign Selling Intensifies

The Nifty is on course to post its weakest calendar-year performance in 15 years, with the benchmark index down nearly 13% so far in 2026. If the decline holds through December, it would be the index’s worst year since 2011, when it fell 24.6%.

The selling has returned after a brief recovery. The Nifty gained about 7% in the April-June quarter but slipped nearly 5% in July-September. On Monday, 28 September, the index fell 360 points to 22,780 and extended its losing streak to seven consecutive weekly declines.

On Tuesday at 10:10 AM, the Nifty 50 index was down 0.85%, or 194 points, at 22,586.00, continuing the slide.

Why Has The Nifty Fallen So Much?

The market has had to deal with several problems at the same time. Indian stocks started the year at expensive valuations, while foreign investors began pulling money out rapidly. The situation worsened as tensions in West Asia pushed crude prices higher and investors grew less confident in the pace of earnings growth.

Foreign investors have been a major source of pressure. Foreign portfolio investors (FPIs) sold $24.6 billion worth of Indian equities through August, marking a record outflow. Selling continued in September, with foreign investors withdrawing ₹13,138 crore from Indian equities in the first half of the month.

The rise in crude prices has added another problem. Brent crude has remained close to $100 a barrel, raising concerns about inflation, corporate margins, and India’s import bill. The rupee has also traded around ₹95-96 against the US dollar, adding to market concerns.

The information technology (IT) sector has had its own set of concerns. Investors are still trying to work out how generative artificial intelligence (AI) could affect traditional outsourcing and technology services. That uncertainty has weighed heavily on technology stocks, with the Nifty IT index down more than 21% so far this year.

What Is The Nifty Outlook For 2026?

Despite the correction, valuations have become less stretched. The Nifty currently trades at around 20.9 times earnings, below its five-year average of 23.5 times and its 10-year average of 23 times.

Domestic investors have also provided support. Domestic institutions invested a record $177 billion over the past 24 months, helped by strong mutual fund SIP flows of more than ₹30,000 crore a month.

The Nifty 2026 performance could still change in the final quarter, but much will depend on what happens to oil prices, bond yields, and foreign flows. Domestic investors have continued to put money into equities, while earnings growth has started to pick up. Whether that support is enough to absorb continued selling from overseas investors remains the key issue for the market.

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