Summary:
Nifty 50 ended the September expiry at 22,716.20, while the September F&O series fell 6.7%. Rising US Treasury yields, elevated crude oil prices, foreign investor selling and expiry-related volatility kept Indian equities under pressure as markets entered October.
Why did Nifty fall during the September expiry? The Nifty 50 closed at 22,716.20 on September 29, 2026, down 64.05 points or 0.28%. The September derivatives series declined 6.7%, with rising US Treasury yields, elevated crude oil prices, foreign investor selling and heavy expiry-day positioning weighing on Indian equities.
The September expiry was the weakest monthly expiry in six months, with Nifty closing well below the 24,334.55 level recorded at the August expiry. The September series also marked the index's weakest F&O performance in 25 years, according to market reports.
Nifty September expiry: What happened?
The Nifty 50 witnessed its weakest monthly expiry in six months on September 29 as rising global bond yields, elevated crude oil prices and foreign investor selling weighed on market sentiment. The benchmark index closed at 22,716.20, down 64.05 points or 0.28% on the expiry day of the September derivatives series.
The index had slipped to an intraday low of 22,569.65 during the session, extending the pressure seen after Monday’s sharp decline. The September expiry marked the weakest monthly expiry since March, when the Nifty had closed at 22,331.40 following the outbreak of the US-Iran conflict.
During the September derivatives series, the Nifty declined 6.7%, making it one of the weakest monthly performances in recent years. The Bank Nifty also remained under pressure, declining 5.7% during the series.
Rising US bond yields trigger risk-off sentiment
One of the biggest concerns for equity markets has been the sharp rise in US Treasury yields. The US 10-year Treasury yield surged to around 5.28%, reaching a two-decade high, as investors remained concerned about inflation, higher interest rates and increased government borrowing.
Higher US yields typically make risk-free assets more attractive compared with emerging market equities. This resulted in foreign portfolio investors (FPIs) reducing exposure to Indian equities. FPIs sold Indian shares worth ₹34,609 crore in the cash market during September after remaining net buyers in the previous two months.
Market participants continued to monitor whether US bond yields could move towards the 5.3% level, as further upside could increase pressure on global equity markets.
Crude oil prices add to market worries
Persistent weakness in crude oil prices remained another major challenge for Indian equities. Brent crude prices moved higher from around $90 per barrel at the end of August to above $100 per barrel during September, driven by geopolitical tensions and concerns around supply disruptions.
India, being one of the world’s largest crude oil importers, remains sensitive to oil price movements. Higher crude prices can impact inflation, corporate margins and the country’s trade balance, creating additional pressure on investor sentiment.
Although the intensity of fighting in West Asia has reduced, concerns around possible disruptions near strategic shipping routes such as the Strait of Hormuz continued to influence energy markets.
Expiry day volatility increases due to derivatives activity
The September expiry session witnessed unusually high volatility as monthly derivatives expiry coincided with the semi-annual Nifty index reshuffle. The closing auction session saw heavy trading activity, with sharp movements in the index during the final minutes.
At one point during the closing auction, the Nifty’s indicative price dropped sharply before recovering, highlighting the impact of large derivative positions and portfolio adjustments.
Foreign investors also increased bearish positions, with cumulative short positions in Nifty and Bank Nifty futures reaching record levels ahead of expiry.
Outlook: Can markets stabilise after the September sell-off?
The near-term market direction will depend on global bond yields, crude oil movement and foreign fund flows. The September correction has pushed the Nifty towards key support zones, while investors are watching whether selling pressure eases in the October series.
Domestic institutional investors provided some support during the decline, but global factors remain the key drivers for market sentiment. With elevated yields, geopolitical uncertainty and crude oil prices still influencing investor behaviour, volatility is likely to remain a key feature of the market in the near term.
