Market turbulence is here to stay, may deepen

3 min readSep 10, 2026 06:00 AM IST First published on: Sep 10, 2026 at 06:00 AM IST

With the Sensex down 1.08 per cent, on Wednesday, Indian stock markets ended the day in the red. Weakness was observed across the board, with small and midcap indices also witnessing a fall. Volatility also increased, with the India VIX rising almost 7 per cent. But the trends across Asian markets were mixed. While the Nikkei was down 0.2 per cent, Kospi was up 1.4 per cent. In spite of the economy growing at a fairly healthy rate in India, markets have been weak for some time. Since the beginning of this year, the Sensex has fallen by roughly 12 per cent. In segments such as IT, the weakness has been more pronounced, with concerns mounting over the long-term growth prospects, given the rapid deployment of AI.

There are several reasons for the current investor skittishness. Brent crude oil has touched $100 a barrel — levels last seen in July — as the conflict in West Asia expands. Attacks by the Iran-backed Houthis on energy facilities and infrastructure in Saudi Arabia mark a dangerous escalation and raise concerns over energy supplies and the broader economic impact of higher prices on external balance, currency and inflation — the Indian crude oil basket has surged to $108.91 per barrel as on September 8, according to data from the Petroleum Planning and Analysis Cell. The Indian rupee has slipped past the 95 mark against the dollar. Tighter global financial conditions will compound matters. US Federal Reserve chairman Kevin Warsh’s comments at the recent Jackson Hole meeting have been viewed as hawkish, leading to expectations that the Fed could now pursue an aggressive policy stance. This has raised the odds of an interest rate hike at the meeting next week. The US 10-year bond yield is currently around 4.8 per cent, while Japanese yields are hovering near 2.9 per cent. In September so far, nervous foreign investors have taken out $1.3 billion from the stock markets, after being net equity buyers in August and September.