Market Analysis · 23 October 2026 · Closing figures
Wall Street’s technology stocks had their worst day since June on Thursday night. Indian shares shrugged that off at Friday’s open, slid towards 22,400 on the Nifty 50 in the afternoon, then recovered most of the loss to close lower for a fourth straight session: the Nifty at 22,600 (down 0.39 per cent) and the Sensex at 73,123.83 (down 0.17 per cent).
The headline numbers hide the damage underneath. The Nifty Midcap 100 fell 2.21 per cent, the Smallcap 100 fell 2.94 per cent, and 189 of 213 stocks in a TES scan closed lower.
The trigger was crude oil, with Brent at about $114.58 a barrel after fresh drone attacks on Saudi Arabia. Oil also explains why defence stocks are falling in the middle of a war: in a sell-off driven by oil and foreign money, the war theme offers no shelter.
- The US tech sell-off did not set India’s direction. Indian IT stocks rose at the open and ended with the smallest sector loss.
- Oil did. Brent closed Friday near $114.58, up from about $106 a week ago.
- The Nifty 50 lost only 0.39 per cent, but midcaps fell 2.21 per cent, smallcaps 2.94 per cent, and 189 of 213 scanned stocks closed lower.
- Four of six defence stocks tracked by TES fell more than 3 per cent, extending a slide that began before this week’s attacks.
The Nasdaq Fell 2.6%, Yet Indian Shares Opened Higher on Friday
The US sell-off did not cause India’s fall. On Thursday, the Nasdaq Composite dropped 2.60 per cent to 26,008.86, its steepest one-day fall since early June, as investors questioned the cost of the artificial intelligence (AI) spending race. On Friday morning the Sensex still opened more than 400 points higher at 73,665.64, and the Nifty IT index rose nearly 3 per cent.
The US damage was concentrated in chipmakers and the large technology platforms. Meta Platforms fell close to 7 per cent after results that showed how heavily its AI build-out is weighing on cash. The Dow Jones Industrial Average, full of older industrial and financial names, ended almost flat.
Indian IT companies sell software and engineering services. They do not make chips. In the first hour, TCS, Infosys and HCL Technologies rose between 2 and 4 per cent.
The gains did not hold across the sector. Nifty IT closed down 0.27 per cent, still the smallest loss among the sector indices. TCS finished up 0.92 per cent, Infosys was flat at +0.04 per cent, and Cyient jumped 7.18 per cent after its September-quarter results.
One more clue points away from Wall Street. On Thursday, before the Nasdaq slide had even begun, Asian markets had already dropped sharply: South Korea fell 3.52 per cent and Japan 2.65 per cent. Oil was moving them first.
Crude Oil Near $114 Is Why the Indian Market Is Falling Today
India buys most of its crude oil from abroad, so every jump in oil prices hits the country’s import bill, the rupee and company costs at once. Brent crude rose 1.25 per cent on Friday to about $114.58 a barrel in the evening, up from above $112 on Thursday and about $106 a week earlier. The rupee was around ₹94.89 to the dollar. That is the main reason the Indian market fell today.
In simple terms, the chain works like this. Costlier oil means India pays more dollars for the same barrels. More demand for dollars weakens the rupee. A weaker rupee makes every import costlier, from crude to electronic parts. Companies that use oil-based inputs, such as paint, plastics, chemicals and transport, see margins squeezed. Investors then worry about inflation and price shares lower.
Vinod Nair, head of research at Geojit Investments, said on Thursday that inflation concerns “took centre stage” and that the rupee weakened steadily through the session. Investors are also cautious ahead of next week’s policy decisions by the US Federal Reserve, the European Central Bank and the Bank of Japan.
Foreign investors sold, Indian funds bought
Two groups decide much of the market’s daily direction. Foreign institutional investors (FIIs) are overseas funds. Domestic institutional investors (DIIs) are Indian mutual funds, insurers and pension funds.
On 22 October, FIIs sold a net ₹3,459 crore of Indian shares, according to NSE’s provisional data. DIIs bought ₹2,891 crore, absorbing about 84 per cent of that selling. Domestic money has been the market’s cushion through this fall. NSE had not published Friday’s provisional figures when this article was updated .
The India Volatility Index (VIX), which measures how much traders expect prices to swing, rose about 6 per cent on Friday. It had already climbed 43 per cent over the month to Thursday.
Saudi Arabia’s Hormuz Bypass Is Under Attack, and Indians Are Among the Casualties
Two attacks on 21 October moved the oil market. Saudi Arabia’s Ministry of Energy said air defences intercepted a drone aimed at a processing facility at the Shaybah oilfield, which can produce about 1 million barrels a day. Falling debris killed two expatriate workers and injured two others. The ministry said operations were not affected.
The same day, King Fahd International Airport in Dammam was hit. India’s Ministry of External Affairs (MEA) said one Indian national died and two were injured at the airport, and another Indian was injured at Shaybah. The MEA said India strongly condemns “the continued attacks on civilian and energy infrastructure in Saudi Arabia”. The Indian Embassy in Riyadh is in contact with Saudi authorities. Indian carriers IndiGo, Air India and Akasa Air have cancelled flights to Saudi Arabia, according to reports.
Yemen’s Houthi group has carried out a months-long campaign against Saudi Arabia, including attacks this month on Riyadh’s King Khalid International Airport. The Houthis did not immediately claim the Shaybah strike.
No barrel was lost at Shaybah, yet oil jumped. Traders are pricing the risk to routes, not one field. The Strait of Hormuz, the narrow sea lane through which most Gulf oil leaves, has been disrupted by Iran’s blockade. Saudi Arabia’s main way around it is the East-West pipeline to the Red Sea port of Yanbu. Flows on that pipeline were reported halted on 5 October after a Houthi strike damaged a pumping station, a risk TES examined in its analysis of the Saudi East-West pipeline shutdown.
Pressure on Hormuz itself has not eased. Iranian state television claimed seven oil tankers were damaged in the strait overnight on Thursday, a claim not independently verified. The International Monetary Fund’s regional director, Jihad Azour, has said the economic impact on Saudi Arabia is “limited” so far and that crude shipments continue to move.
Saudi Arabia is one of India’s largest crude suppliers. New Delhi’s buffers include strategic crude reserves at Visakhapatnam, Mangaluru and Padur, run by Indian Strategic Petroleum Reserves Ltd, and refiners that already buy from several suppliers, including Russia and Iraq.
Why Defence Stocks Are Falling During a War in West Asia
Defence stocks are falling because they had risen too far, too fast, and because investors are questioning how quickly orders turn into revenue. Of six defence stocks tracked by TES, five closed lower on Friday and four fell more than 3 per cent. Mishra Dhatu Nigam (MIDHANI) fell 5.19 per cent, Zen Technologies 4.18 per cent, Bharat Dynamics 3.33 per cent and Hindustan Aeronautics 3.08 per cent. Bharat Electronics slipped 0.69 per cent. Krishna Defence rose 3.09 per cent.
| Defence stock | Friday close |
|---|---|
| Mishra Dhatu Nigam (MIDHANI) | -5.19% |
| Zen Technologies | -4.18% |
| Bharat Dynamics (BDL) | -3.33% |
| Hindustan Aeronautics (HAL) | -3.08% |
| Bharat Electronics (BEL) | -0.69% |
| Krishna Defence | +3.09% |
The first reason defence stocks are falling is the run-up. The Nifty India Defence index was up about 20.65 per cent for 2026 as of mid-September. Stocks priced for strong growth fall faster when the whole market turns.
The second reason is execution. On 21 October the defence index fell about 3 per cent in intraday trade to 8,832.55, with every constituent lower at one point, amid concerns over delays in finalising programmes and inspecting finished products. Data Patterns has flagged delays in customer inspections, which hold up deliveries and revenue. Its order book still stood at ₹2,654 crore as of 30 June 2026, including ₹920 crore of firm orders and ₹1,726 crore under negotiation, the company said.
The third is the market itself, and it explains why defence stocks are falling on the same days as everything else. When foreign funds cut exposure to India, they sell what they own most of, and the defence names that rallied hardest are among the easiest to sell.
The war abroad does not lift Indian defence revenue in the short term. Indian manufacturers earn from Ministry of Defence contracts that move through multi-year timelines, from Defence Acquisition Council clearances to trials, deliveries and payment. A conflict raises the long-term case for indigenous production. It does not add this quarter’s revenue.
TES has tracked this pattern before in its look at Indian defence stock valuations and at how defence stocks behaved earlier in the Middle East war.
Midcaps and Smallcaps Fell 2% to 3% While the Nifty 50 Lost 0.4%
The fall was broad, not limited to a few large companies. The Nifty Midcap 100 closed down 2.21 per cent at 55,800.65 and the Smallcap 100 down 2.94 per cent, against 0.39 per cent for the Nifty 50. Of 213 stocks in TES’s scan, 189 fell and 24 rose. The median stock lost 2.16 per cent, and 75 stocks fell 3 per cent or more.
TES’s scan leans towards midcaps and smallcaps, so it shows more damage than the Nifty 50 does. Its direction still matches the official indices: according to market reports, the midcap and smallcap indices have now lost for several sessions in a row.
Smaller companies fall faster for a plain reason. They have fewer buyers on any given day, so a wave of selling moves their prices more. Many of them also trade at high valuations after the gains of the past two years.
Company news added to the pressure. Swiggy fell about 16 per cent after its September-quarter results. Its overall loss narrowed to ₹922 crore and revenue rose 36 per cent, but losses at its Instamart quick-commerce arm widened.
Among sector indices, metals fell 2.71 per cent, realty 2.38 per cent and public sector banks 2.26 per cent. Energy fell 1.66 per cent. IT lost the least, at 0.27 per cent. Defence has no sector index in TES’s table, so its moves above come from the six named stocks.
The 2019 Abqaiq Attack Shows How Saudi Oil Shocks Reach Dalal Street
India has seen this pattern before. On 14 September 2019, drones and missiles struck Saudi Aramco’s Abqaiq processing plant and the Khurais oilfield, briefly knocking out about half of Saudi Arabia’s oil output. When Indian markets opened on Monday, 16 September, oil had posted its biggest intraday jump in 28 years. Shares of oil marketing companies, tyre makers, paint makers and airlines fell by up to 7 per cent, and the Sensex closed 262 points lower.
The 2019 shock faded within weeks, as Saudi output was restored and the market moved on.
The 2026 situation is different in one important way. In 2019 the attack was a single night. Today the pressure comes from a campaign: repeated drone strikes on Saudi energy sites and airports, with Hormuz already disrupted. A single event fades. A sustained risk keeps a premium in the oil price, and that premium is what Indian investors are paying for.
What to Watch Next for Indian Stocks and Oil
Will the Nifty hold 22,400 and then 22,180?
The Nifty closed at 22,600 after dipping towards 22,400 in the afternoon. Analysts at Bajaj Broking flagged 22,400 as a key support level, with the recent low near 22,180 below it. A close under 22,180 would mark a new lower low and signal that the correction is not yet over.
Will domestic funds keep buying?
Indian mutual funds and insurers have absorbed most of the foreign selling. If FIIs keep selling ₹3,000 crore or more a day while DII buying slows, the fall could deepen.
Will oil stay above $110?
The price depends on whether attacks on Saudi energy sites continue and whether Hormuz traffic improves. Each new strike on Shaybah, Yanbu or the East-West pipeline adds to the risk premium.
What will the US Federal Reserve decide on 27–28 October?
The Fed’s policy meeting, alongside decisions by the European Central Bank and Bank of Japan next week, will shape global money flows. Higher-for-longer US interest rates usually draw foreign money away from markets such as India.
When will defence stocks recover?
Until order execution improves, the answer to why defence stocks are falling stays the same. Watch the September-quarter results of defence companies over the next few weeks, especially management comments on order execution and delivery schedules. Fresh Defence Acquisition Council approvals and contract signings would address the execution worry directly.
The Takeaway: Oil, Not the Nasdaq, Decided India’s Day
Friday showed which global signal Indian markets actually listen to. A 2.6 per cent fall on the Nasdaq barely moved Indian IT stocks, and even lifted them for an hour. Brent’s climb to about $114.58, after one drone over a Saudi desert oilfield, dragged down nearly every other sector. The Nifty 50’s 0.39 per cent loss looks mild until you read the midcap and smallcap numbers. Defence stocks, which many investors treat as a war hedge, fell with the rest because their prices had raced ahead of their revenue.
In 2019, Abqaiq was a one-day shock that the market forgot within weeks. The test for India now is whether the Gulf’s attacks stay a series of headlines or become a lasting tax on every barrel the country imports. Until that is clear, the oil price, not Wall Street, will set the tone on Dalal Street.
Source note: Statements from Saudi Arabia’s Ministry of Energy and India’s Ministry of External Affairs; NSE market and provisional institutional-flow data; company disclosures; TES’s own scan of 213 listed stocks (23 October 2026 close); and market reporting from Reuters, Bloomberg and Business Standard. Shaybah details: Saudi Gazette, Bloomberg.
