India’s volatility index, India VIX, jumped more than 6 per cent after the benchmark indices fell over 1.3 per cent in today’s trade (October 19). The volatility index fell to an intra-day low of 14.93 from its previous close of 14.06. The Nifty 50 fell as much as 1.32 per cent to a low of 22,845, breaching the psychological mark of 22,900. The BSE Sensex cracked 1.52 per cent, or 1,140.76 points, to the day’s low of 73,708.54.
In the Nifty 50, Axis Bank was the biggest loser, crashing 5 per cent. It was followed by Infosys, HDFC Bank, Tata Motors Passenger Vehicles (PV), Trent, and many others. However, the PSU Banks held their ground in today’s weak session and traded in the green. Except for the Nifty PSU Bank, all the sectoral indices were trading in the red and crashed over 0.5 per cent. The Nifty PSU Bank index was up 2.8 per cent.
The probable triggers behind the fall could be Foreign Institutional Investor (FII) outflow, rising inflation, and a fall in private banks.
FII Outflow
FIIs have net bought equities worth Rs 18,785.67 crore on Friday (October 16), according to exchange data. However, in October 2026 so far, FIIs were net sellers of $52,100 crore, which is the third-biggest monthly churn out in 2026. Over the last 10 months, Indian primary markets witnessed FII net outflows of Rs 3,12,402 crore.
Fall in private banks
Private Bank stocks dropped as much as 5 per cent in today’s trade after their margins felt pressure in the second quarter of the current financial year. HDFC Bank’s Net Interest Margin (NIM) fell 14 basis points (bps) to 3.16 per cent, ICICI Bank’s fell 12 bps to 4.18 per cent, and Axis Bank’s fell 37 bps to 3.36 per cent. Lower margins mean the bank earns less on each rupee it lends.
The overall private bank index, Nifty Private Bank, fell 2 per cent. Axis Bank was the biggest loser in the index, followed by HDFC Bank, Kotak Mahindra Bank, ICICI Bank, Bandhan Bank, and others.
India’s rising inflation
The headline inflation rate in India rose to 5.54% in September 2026 from 4.83% in the previous month, the highest since October 2024 and ahead of market expectations of 5.4%. It was the 11th straight month of rising inflation in the economy, approaching the Reserve Bank of India’s upper tolerance limit of 6% as adverse weather and geopolitical shocks to oil prices lifted the costs of major products in the Indian consumer basket.
Food costs were 5.97% higher year-on-year, with onion prices more than doubling while ginger (62.9%) and garlic (54.6%) also increased sharply. Meanwhile, higher oil prices and a weakening rupee drove transportation inflation to 5.01%.