- Nifty 50 dropped over 1% with all sectors, especially Realty, trading in the red
- Rupee fell past 90 against the US dollar, pressuring markets amid inflation fears
- Foreign investors sold shares worth Rs 11,820 crore in early December 2025
The Indian markets faced intense pressure during Monday's trade, with the Nifty 50 trading with cuts of more than 1%. Almost all sectors were trading in the red, with Nifty Realty falling almost 4%.
The pain was witnessed in the broader market as well, with Nifty Smallcap 250 trading with cuts of almost 2.5%. Nifty Midcap 150 was also down more than 1.5%.
This accounts for Nifty's worst fall since Aug. 26, 2025, with the benchmark breaching the exponential moving average (EMA) of 25,987.
Here, we are taking a look at five key reasons dragging the markets on Monday.
1. Rupee Depreciation
Currency depreciation has been weighing on markets massively, especially with the rupee breaching past the 90 levels against the US dollar.
Although the dollar index has been trending relatively weaker, rising concerns about inflation and sustained FII outflows, has kept the rupee above 90 levels - a key psychological marker.
2. FII Outflows
That brings us to our second point - FII outflows. Foreign investors have remained in sell-off mode, offloading equities worth Rs 11,820 crore in the first week of December alone.
In 2025 so far, FIIs have offloaded shares worth Rs 1,55,495 crore, as cautious sentiment continue to weigh on markets.
3. Primary Market Actions Block Funds
Liquidity is being drained from the secondary market as massive funds are locked in primary market activities.
The allotment for the Meesho IPO, which was subscribed 79 times, is scheduled for today, keeping substantial investor capital blocked.
Additionally, new issues like Wakefit and Corona Remedies opening for subscription today are further diverting retail and HNI liquidity away from listed stocks.
4. No India-US Trade Deal Outcome
India, till date, remains one of the few countries yet to reach a trade deal agreement with the United States under the leadership of Donald Trump.
The relationship between the two countries hasn't been helped by Russian President Vladimir Putin's recent visit to India.
As the impasse continues, foreign investors are growing increasingly cautious about India.
5. Caution Ahead Of The US Fed Policy Outcome
Global caution is elevated ahead of the US Federal Reserve's crucial policy meeting scheduled for Dec. 9-10.
With the rate decision due this midweek, investors are staying on the sidelines, anxious about the Fed's forward guidance on interest rate cuts for 2026.
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