Indian stock markets wrapped up the final session of fiscal year 2026 with over 2% fall on Monday, with the Sensex recording its first annual decline in six years. The crisis in West Asia, which entered its fifth week, continued to weigh on market sentiment.
The Sensex fell 1,635.67 points, or 2.22%, to close at 71,947.55, while the Nifty declined 488.20 points, or 2.14%, to end at 22,331.40.
After Monday’s losses, both benchmarks declined 11.49% and 11.31% in March – the worst since Covid-hit 2020. A record Rs 51.09 lakh crore of investor wealth was wiped out during the month, including Rs 9.74 lakh crore on Monday alone. As a result, the entire gains made during fiscal 2026 were erased, with investor wealth declining by Rs 46,474 crore for the year—marking the first annual decline in three years.
Overall, the Sensex recorded a decline of 7.06% in fiscal 2026 — its first annual fall in six years. The Nifty dropped 5.05%, registering its first annual decline in three years. Excluding the Covid-affected fiscal 2020, this marks the steepest annual decline for both indices in a decade. Markets will remain closed on Tuesday on account of Mahavir Jayanti.
What do researchers say?
Nirav Karkera, Head of Research and Fund Manager at W by Groww, said the year can broadly be divided into three phases. “Initially, markets were weighed down by valuation concerns, foreign capital outflows, and the AI narrative. This was followed by a brief phase of optimism driven by hopes of improved earnings and more reasonable valuations. The third phase, triggered by the geopolitical crisis, pushed markets further below baseline levels,” he said.
He added that a lot hinges on the duration and outcome of the current crisis, and it is critical to assess how long the pressure persists.
“Though the crisis in West Asia has led to market dislocation, such buying opportunities do not come often. Valuations are now in an attractive zone,” said Madhu Nair, Chief Executive Officer at Union Asset Management Company.
He believes that one needs to maintain a positive outlook on equities from a three- to five-year perspective, and returns could improve significantly once the conflict subsides.
Broader indices
Broader indices underperformed the benchmarks in March, with BSE Midcap and BSE Smallcap indices plunging 11.16% and 10.90%, respectively.
For the fiscal, despite calls of froth in the market by market experts, these indices did not do too badly. While BSE Mid-cap performed better than benchmark indices at -2.39%, the BSE Smallcap performed at par with benchmark indices falling 7.33%.
Foreign portfolio investors (FPIs) offloaded a record $20.9 billion (Rs 1.92 lakh crore) in fiscal 2025–26, of which a bulk—$13.3 billion (Rs 1.23 lakh crore)—was sold in March alone.
In contrast, domestic institutional investors (DIIs) bought equities worth a record Rs 8.50 lakh crore in fiscal 2026, with March witnessing an all-time high monthly inflow of Rs 1.43 lakh crore.
Banking stocks emerged as the top laggards on Monday following the RBI’s new restrictions on banks’ foreign exchange positions aimed at stabilising the rupee, which triggered sharp declines across major lenders.
The Nifty PSU Bank index fell 4.56%, while the Nifty Private Bank index dropped 3.37%. Apart from banking, financial services, realty, and consumer durables were among the top sectoral losers.
Bajaj Finance, SBI, Indigo, Bajaj Finserv, and Axis Bank were the top Sensex losers, while Tech Mahindra and Power Grid were the only gainers among the 30 constituents.
