Sensex Delivers Zero Returns in Two Years, Hits Two-Year Low

Sensex Delivers Zero Returns in Two Years, Hits Two-Year Low​

The Sensex has erased two years of optimism, slipping from the 100,000 hype to a two-year low and delivering zero returns. Weak earnings, heavy FII outflows, global tensions, and delayed Fed cuts dragged markets through FY26, leaving investors with caution as FY27 shapes up as a year of selective opportunities.

Market Performance in FY26​

India's equity markets have delivered little to cheer investors over the past two years, with the benchmark Sensex now hovering near a two-year low and returns effectively flat over this period. The weakness has been particularly visible in FY26, when both headline indices closed the year in negative territory amid a combination of global shocks and domestic pressures.
The Nifty ended the financial year 2026 down over 5%, while the Sensex fell 7% near 72,000. Sensex hit a high of about 85,000 twice during the last two years. The correction can be put into perspective by recalling the talk of the index hitting 100,000.

Factors Pressuring Markets​

Markets remained under sustained pressure through most of the calendar year 2025 due to tariff-related uncertainties, persistent foreign outflows, weak corporate earnings growth, elevated valuations and a weakening rupee. The situation worsened toward the end of the financial year as geopolitical tensions escalated in West Asia following the Iran-Israel-US conflict. The flare-up triggered a sharp spike in crude oil prices, further complicating India’s macro outlook by raising inflation concerns and squeezing corporate margins. Expectations of US Federal Reserve rate cuts were pared back significantly, tightening global liquidity conditions and adding to equity market stress.

FII Outflows​

Foreign institutional investors played a central role in the market downturn. Over FY26, FIIs pulled out Rs 1.8 lakh crore from Indian equities, with a sharp acceleration in selling seen in the final quarter. In the three months ending March 2026 alone, outflows stood at Rs 1.31 lakh crore.

Sectoral Performance​

Pockets of strength in some areas were outweighed by steep declines across several key sectors.

Outlook for FY27​

Looking ahead, the outlook remains cautious. According to Brickwork Ratings, FY27 is likely to remain a year of selective opportunities rather than broad-based rallies. Commodities could outperform, driven by infrastructure demand and geopolitical risk premiums, while equities may continue to face headwinds from global uncertainty and earnings pressures. Debt markets, meanwhile, are expected to offer relatively more stability.