On Monday, September 28, the Indian equity benchmark indices plunged, with the S&P BSE SENSEX and NSE NIFTY50 each falling 1.6% to intraday lows of 72,716.23 and 22,762.20, respectively. Both benchmarks were trading at their six‑month low levels. The volatility gauge, India VIX, surged as much as 16.3% to an intraday high of 14.15, reflecting heightened market uncertainty. The crash was driven largely by banking stocks and a cautious stance from investors amid rising U.S. bond yields and escalating crude prices.

Banking stocks were the most significant laggards, with the NIFTY Bank index declining over 1,000 points to an intraday low of 54,494.40. Key losers included YES Bank, Union Bank of India, IDFC First Bank, Canara Bank and Punjab National Bank. The fall coincided with the 10‑year U.S. bond yield surging to its highest level in nearly 20 years at 5.2%, making U.S. government securities more attractive and prompting a flight of capital from emerging‑market equities such as India.

The banking sector was further impacted by the cancellation of a three‑day nationwide strike by the United Forum of Bank Unions (UFBU). The strike, scheduled from Monday until September 30, was called off after the Indian Banks' Association (IBA) assured the unions of a five‑day work week and other concessions. This development, however, did not prevent the sector's sharp decline amid broader market sell‑off.

Oil‑sensitive stocks also suffered, with the Nifty Oil & Gas benchmark falling 1.1% to 10,739 points, down from 10,862.15 at the previous close. Indian Oil, Hindustan Petroleum, Asian Paints, Bharat Petroleum and Apollo Tyres were among the top losers. The decline followed a rebound in global crude prices, as Brent crude (November contract) surged to $107 per barrel after the U.S. President rejected the latest Iran peace proposal, raising concerns over the Strait of Hormuz.

Foreign portfolio investors continued to withdraw, selling equities worth ₹3,693.93 crore on a net basis on Friday, while domestic institutional investors purchased ₹2,838.17 crore. The sustained outflow, coupled with the sharp rise in U.S. yields and oil prices, contributed to the negative market breadth, where 2,360 shares fell against 708 advancing on the NSE. Additionally, 48 stocks on the 50‑share index were trading in red, underscoring the breadth of the sell‑off.

The India VIX, a measure of expected short‑term volatility derived from options order books, reflected the market's heightened risk perception. Expressed as annualised volatility, the index's 14.15 intraday peak underscored the sharp price swings experienced during the session. The combination of banking weakness, oil‑sector pressure, and foreign capital outflows left the market in a highly volatile state, with no clear direction emerging as the day progressed.