Do you know why companies pay dividends? Key facts investors should know

 

Companies pay dividends to distribute profits to shareholders, reward their investment, and signal financial strength. Regular payouts often indicate stable earnings and confidence in future cash flows, making such companies attractive to long-term and income-focused investors.

Dividends offer a reliable yield without necessitating the sale of shares, increasing their attractiveness to investors. They are usually linked to established companies that have fewer options for reinvesting earnings. Moreover, dividends help effectively utilise surplus cash, thereby minimising the likelihood of management making wasteful expenditures. Companies that regularly pay dividends may also experience heightened investor demand, which can gradually reduce their total cost of capital.

“Dividends are a company’s way of saying — ‘we’re generating more cash than we currently need, and we’d rather reward shareholders than let the money gather corporate dust," said, Mohit Gulati, CIO and Managing Partner at ITI Growth Opportunities Fund.

According to Gulati, young companies usually reinvest every rupee back into growth. Mature companies, however, often start sharing profits because their cash flows become more predictable and capital allocation becomes more disciplined.

In many ways, Gulati highlighted that the dividends are like a financial report card with real money attached. Anyone can present a glossy investor deck. Writing a dividend cheque is harder. It signals confidence, balance sheet strength, and management’s belief that the business can fund future growth and still reward shareholders.

That said, a high dividend isn’t always a sign of greatness. Sometimes it simply means the company has run out of meaningful growth avenues. Gulati also emphasised that markets love growth stories; dividends usually arrive when the story becomes more mature, stable, and utility-like.

"So the real question investors should ask is not ‘Does the company pay dividends?’ but ‘Is management allocating capital intelligently?’ Because ultimately, smart capital allocation compounds wealth far more than flashy announcements ever do,” said Gulati.

Types of Dividend

Companies distribute dividends in various forms and at different frequencies, depending on profitability and policy. A special dividend is a one-time payout made when a company has excess cash, while a preferred dividend is a fixed payment made to preferred shareholders, typically on a quarterly basis. Companies may also declare an interim dividend during the financial year before final accounts are prepared, and a final dividend after year-end results are finalised.

Dividends are most commonly paid in cash, either by bank transfer or cheque. In some cases, companies may issue stock dividends, where shareholders receive additional shares in proportion to their holdings. Less commonly, dividends can be distributed in the form of assets, securities, or other financial instruments. Overall, dividend decisions reflect a company’s financial health and capital allocation strategy and can influence investor sentiment and share price movements.

Impact of Dividend on Share Prices

Distributing dividends does not alter a company's inherent value, but it does decrease its equity by the exact amount of the payout, as cash exits the organisation. After being declared and distributed, dividends are irreversible for accounting purposes.

Generally, stock prices may increase prior to the dividend as investors try to qualify for it, and then decline following the ex-dividend date when new purchasers are no longer eligible for the payout. Market mood can affect the degree of these fluctuations. To understand the impact of dividends, investors should monitor key dividend-related dates that determine eligibility and payment schedules.

What are Dividend Stocks?

Dividend stocks are shares in publicly traded companies that routinely allocate a portion of their profits to investors. These are generally mature companies that exhibit steady earnings and have a solid history of benefiting their shareholders. When choosing dividend stocks, investors should seek a payout ratio of at least 50%, a dividend yield of 3% to 6%, and a consistent dividend track record, along with manageable debt levels that reflect financial robustness and dependability.

Tushar Badjate, Director of Baadjate Stocks & Shares Pvt. Ltd explained that most people enter the stock market to chase price appreciation. Buy low, sell high. That’s the dream. But there’s a quieter, steadier way companies reward you: dividends.

Badjate said that when a company earns more than it needs to run its operations, it has a choice. Reinvest or distribute. A dividend is simply what happens when a company chooses to share its profits. Cash hits your account. No selling, no timing the market.

"The companies that do this regularly, Coal India, ONGC, REC, Power Finance Corporation, aren’t making a charitable gesture. They’re telling you something: we have more cash than we know what to do with. In a market where most companies are still chasing profitability, that’s worth paying attention to.

For younger, high-growth companies, skipping dividends makes sense. Reinvest everything, grow faster. Fair enough. But for an established business that suddenly stops paying? Start asking questions.

Dividends won’t make you rich overnight. But stack them over the years, reinvest them, and they quietly become one of the most powerful parts of a long-term portfolio.

Price tells you what the market thinks today. Dividends tell you what the business actually earns," said Badjate.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.

At its core, a dividend is a portion of a company’s earnings distributed directly to its shareholders. When you own shares in a business, you own a piece of that business—and dividends are your direct share of the profits.

But why do companies choose to give away their cash instead of keeping it?

Why Companies Pay Dividends

Companies generally pay dividends for three strategic reasons:

• Sharing the Wealth (Rewarding Loyalty): When a company matures, it generates steady, predictable profits. Paying a dividend is a direct way to reward shareholders for investing their capital, providing them with a tangible return on investment (ROI) without requiring them to sell their shares.

• Signaling Financial Strength: A consistent or growing dividend sends a powerful message to the market: "Our business is highly profitable, and we are confident in our future cash flows." Because dividends are paid out of actual cash, they cannot be faked with creative accounting.

• Attracting Institutional Investors: Many large institutional investors, pension funds, and mutual funds operate under strict mandates that only allow them to buy stocks that pay regular dividends. By offering a dividend, a company significantly expands its pool of potential buyers, which can help stabilize and support its stock price.

  
  
  

The Lifecycle: Dividend Payers vs. Non-Payers

Not all profitable companies pay dividends, and that choice usually depends on where the company sits in its growth lifecycle.

[Young/Growth Stage] ──> Reinvests 100% of profits ──> Focus: Capital Appreciation (e.g., Tech)
[Mature/Stable Stage] ──> Generates excess cash    ──> Focus: Steady Income + Growth (e.g., FMCG, Utilities)

• Growth & Tech Companies (Non-Payers): Younger, fast-growing companies (like many tech firms) rarely pay dividends. They believe they can create more value for shareholders by reinvesting 100% of their earnings into research and development, building factories, or acquiring competitors. Investors buy these stocks expecting the share price to grow (capital appreciation).

• Mature & Established Companies (Payers): Companies in stable industries (like consumer goods, utilities, banking, or energy) have already scaled. They generate far more cash than they can logically reinvest into growth. Instead of letting that cash sit idle, they return it to investors.

4 Key Metrics Every Dividend Investor Must Know

If you are looking to build a portfolio of dividend-paying stocks, you shouldn’t just look at the absolute rupee or dollar amount being paid. You need to evaluate these four vital metrics:

1. Dividend Yield

This is the annual dividend payment divided by the stock's current share price, expressed as a percentage.

$$Dividend\ Yield = \frac{Annual\ Dividend\ Per\ Share}{Current\ Share\ Price} \times 100$$

• Why it matters: It tells you your cash return relative to the money you invest today. If a stock is priced at ₹100 and pays an annual dividend of ₹4, its yield is 4%.

2. Dividend Payout Ratio

This measures the percentage of a company’s net income that is paid out as dividends.

$$Payout\ Ratio = \frac{Total\ Dividends\ Paid}{Net\ Income} \times 100$$

• Why it matters: This tells you if the dividend is sustainable. A payout ratio between 30% and 60% is generally healthy. If the ratio is over 80% or 90%, the company is giving away almost all its profits, leaving very little safety margin if earnings drop.

3. Dividend Growth Rate

This tracks the annualized percentage growth of a company's dividend payments over time (e.g., 3-year or 5-year CAGR).

• Why it matters: A company that increases its dividend by 8-10% every year is an excellent hedge against inflation. It proves the company's underlying earnings are growing sustainably.

  
  
  

4. Dividend Track Record

This is the historical consistency of a company's payments. In global markets, companies that have increased their dividends every single year for 25 consecutive years are crowned "Dividend Aristocrats." In India, looking for companies with a flawless 10-to-15-year history of uninterrupted payouts helps filter out unreliable businesses.

3 Critical Timeline Dates to Remember

You cannot simply buy a stock an hour before a dividend is paid out and expect to receive it. You must understand the specific timeline:

Date	What It Means	Investor Action Required
Dividend Dividend Record Date	The cutoff date set by the company. You must officially be on the shareholder roster by the close of this day to get paid.	Ensures administrative accuracy for the company.
Ex-Dividend Date	The most critical date for buyers. It is typically set one business day before the Record Date.	To get the dividend, you must buy the stock BEFORE this date. If you buy on or after the Ex-Dividend date, the previous owner gets the cash.
Payment Date	The day the cash is actually deposited into your bank account or brokerage wallet.	Usually occurs a few weeks after the Record Date.

A Warning on "Dividend Traps": A massive dividend yield (e.g., 12% or 15%) is often a red flag. If a company's business model is failing, its stock price will plummet. Because the stock price drops, the mathematically calculated dividend yield shoots up. Always check the payout ratio and earnings health to ensure you aren't buying into a business in terminal decline.

Share:

Read More

Keep your kidneys healthy with these 5 foods in daily diet

 

The average human body has a pair of kidneys that play a vital role in maintaining the metabolism of the body. They filter out waste products and toxins, along with excess fluids. Besides detoxification, the kidneys are also helpful in regulating the blood pressure and maintaining electrolyte balance. Kidneys also produce a hormone that is essential for the formation of red blood cells.

Healthy kidneys are necessary for overall well-being, and any impairment can affect multiple organ systems. Lifestyle factors like adequate hydration and consumption of a balanced diet can influence renal function.

Here is what you must add to your daily diet to keep your kidneys healthy.

Lemon

It has been found to be rich in vitamin C and citric acid, which aid in preventing kidney-stone formation. It also has a positive influence on the process of detoxification. Drinking warm lemon water can aid in improving hydration and supporting the kidneys in efficient excretion of metabolic waste.

Cucumber

This vegetable has a high content of water, and is beneficial for kidneys. It aids in diluting urine and flushing out the toxins. It also prevents dehydration. Cucumbers contain antioxidants that may reduce inflammation and promote adequate functioning of the kidneys.

Water

Water intake is one of the most important ways of keeping the kidneys healthy. Sufficient intake can help in flushing the toxins out and also prevents concentration of urine. This reduces the risk of occurrence of kidney stones. Optimal hydration maintains the electrolyte balance as well.

Coconut water

It is a natural drink known to be rich in electrolytes. It not only supports hydration, but also helps in maintaining kidney function. Its low sodium and high potassium content makes it a refreshing drink, healthier than sugary beverages.

Cranberries

These berries may aid preventing urinary tract infections by inhibiting the adhesion of bacteria to the lining of the tract. They have also been found to contain anti-oxidants that protect the kidney cells from damage. Unsweetened cranberry juice can also indirectly support kidney health.

In case of any complaints like pain in the flanks of the abdomen, or difficulty in micturition or painful micturition, the healthcare provider must be contacted.

FAQs on foods that help improve kidney he

alth:

1. Which foods are considered good for kidney health?

Foods that support kidney health include berries, apples, cauliflower, cabbage, garlic, onions, egg whites, and fatty fish like salmon. These foods are generally low in sodium, potassium, or phosphorus and rich in antioxidants.

2. How do berries help improve kidney health?

Berries such as blueberries, strawberries, and cranberries are packed with antioxidants that help reduce inflammation and oxidative stress, which can otherwise damage kidney tissues.

3. Are apples beneficial for the kidneys?

Yes. Apples are high in fibre and have anti-inflammatory properties. They are also low in potassium, making them suitable for people with kidney concerns.

4. Why are garlic and onions recommended for kidney health?

Garlic and onions enhance flavour without increasing sodium intake. Garlic also contains compounds that may help lower cholesterol and reduce inflammation, easing the workload on the kidneys.

5. Is cauliflower safe for people with kidney problems?

Cauliflower is a kidney-friendly vegetable because it is low in potassium and phosphorus and provides essential nutrients like vitamin C and fibre.

Incorporating kidney-friendly foods into your daily meals is one of the most effective ways to support your body's natural filtration system. Your kidneys work around the clock to filter waste, balance fluids, and manage blood pressure.

When focusing on kidney health, the goal is to consume foods rich in antioxidants and anti-inflammatory compounds while being mindful of sodium, potassium, and phosphorus levels—especially if you are actively managing your metabolic health.

Here are 5 nutrient-dense foods that seamlessly fit into a traditional daily diet to promote optimal kidney function:

1. Garlic (Lehsun)

Garlic is a potent anti-inflammatory and antioxidant superpower. It owes its health benefits to allicin, a sulfur compound that gives garlic its distinct aroma and therapeutic properties.

• Why it helps: Chronic high blood pressure is a leading cause of kidney stress. Allicin stimulates the production of nitric oxide, which helps relax blood vessels and lower blood pressure.

• How to eat it: Crush or chop fresh garlic cloves and let them sit for 5 to 10 minutes before cooking to activate the allicin. It serves as an excellent flavor enhancer, allowing you to cut back on added table salt.

2. Onion (Pyaz)

Onions are a staple of daily cooking, but they are also exceptionally rich in quercetin, a powerful flavonoid antioxidant.

• Why it helps: Quercetin protects renal cells from oxidative stress and helps maintain healthy blood vessels. Onions are naturally very low in potassium and sodium, making them an ideal base for kidney-conscious meals. They also contain chromium, which assists the body with blood sugar regulation.

• How to eat it: Enjoy them raw in moderate amounts in salads, or use them cooked as the foundation for your daily dals and vegetable dishes.

3. Red Bell Peppers (Shimla Mirch)

While many vegetables are loaded with potassium—which the kidneys must work harder to excrete—red bell peppers are a notable exception.

• Why it helps: They are low in potassium but exceptionally high in Vitamins C, B6, and A, along with folic acid and lycopene. Vitamin C is a crucial antioxidant that neutralizes free radicals, protecting the delicate nephrons (filtering units) within the kidneys.

• How to eat it: Slice them raw into salads, roast them, or stir-fry them with other seasonal vegetables.

  
  
  

4. Apples (Seb)

The old adage holds true for renal health. Apples are packed with a soluble fiber known as pectin.

• Why it helps: Pectin binds to cholesterol and toxins in the digestive tract, helping excrete them from the body before the kidneys have to filter them. This reduces the workload on the renal system. Apples also possess anti-inflammatory properties and help lower cholesterol, supporting overall cardiovascular health.

• How to eat it: Eat one whole, fresh apple as a mid-morning or afternoon snack. Leave the skin on, as that is where a significant portion of the fiber and antioxidants reside.

5. Olive Oil or Cold-Pressed Mustard Oil

Choosing the right cooking fat is essential for managing systemic inflammation, which can negatively impact renal tissues over time.

• Why it helps: High-quality, cold-pressed oils are excellent sources of monounsaturated fatty acids (like oleic acid). These healthy fats are highly stable, reduce inflammation, and help maintain healthy cholesterol ratios, protecting the blood vessels feeding the kidneys.

• How to eat it: Use a measured amount (1 to 2 tablespoons daily) for your regular cooking, pan-searing, or as a light dressing over cooked grains.

The Golden Rule of Kidney Health: Hydration

No single food can protect your kidneys without adequate water intake. Drinking sufficient water allows your kidneys to easily clear sodium, urea, and toxins from the blood. A simple way to check your hydration is by looking at your urine color—it should ideally be a pale, straw-like yellow.

If you have existing renal concerns, it is always a good idea to monitor your specific daily intake of fluids, protein, and minerals in consultation with a healthcare professional.

Share:

Read More

Diabetic and eating ghee with roti? Here’s what celebrity dietitian Rujuta Diwekar says about this food habit

 

Celebrity nutritionist Rujuta Diwekar has once again sparked conversation around traditional Indian eating habits after explaining why diabetics should not completely avoid desi ghee. In a time when low-fat diets and calorie counting dominate health discussions, Diwekar continues to advocate simple, balanced Indian meals that include everyday staples like ghee, dal, rice and rotis.

In one of her Instagram videos, the nutrition expert explained that adding desi ghee to wheat rotis may actually help people with diabetes by lowering the glycaemic impact of the meal. According to her, traditional eating practices often have nutritional logic behind them, especially when foods are consumed in moderation and alongside balanced meals.

What is desi ghee and why is it so widely used in Indian diets?

Desi ghee, also known as clarified butter, has been part of Indian kitchens for centuries. It is commonly used for cooking, topping rotis, preparing parathas or simply mixed into dal and rice for flavour. Many households also use a small amount of ghee on toast or traditional sweets.

Despite its rich texture and calorie content, desi ghee contains fat-soluble vitamins like vitamin A and healthy fats. In Ayurveda, ghee has long been considered beneficial for digestion, immunity and overall wellness when consumed in sensible quantities.

According to Rujuta Diwekar, the problem is not necessarily ghee itself but excessive ultra-processed eating habits and poor dietary balance. Her approach focuses more on mindful eating rather than completely eliminating traditional foods.

Why does Rujuta Diwekar recommend ghee for diabetics?

In her video, Rujuta Diwekar explained that applying a small amount of desi ghee on wheat rotis may help reduce the glycaemic index of the meal. The glycaemic index refers to how quickly foods raise blood sugar levels after being consumed.

Foods with a lower glycaemic impact release sugar more gradually into the bloodstream, which can help avoid sudden spikes in blood glucose levels. This is particularly important for people living with diabetes, where stable blood sugar management plays a major role in long-term health.

Diwekar said ghee slows digestion slightly when paired with carbohydrates like wheat rotis, potentially helping the body process glucose more steadily. However, experts generally advise moderation, especially for people managing diabetes, cholesterol issues or calorie intake.

Can eating desi ghee every day be healthy?

According to nutrition experts, moderate amounts of desi ghee can form part of a balanced diet for many people. Ghee contains fats that help absorb certain vitamins and may support satiety, meaning people feel fuller for longer after meals.

Rujuta Diwekar also highlighted that ghee is traditionally valued in Ayurveda for supporting digestion and reducing inflammation. She added that it may help with gut health and can also enhance the flavour of simple home-cooked meals.

However, health professionals continue to stress portion control. Excessive intake of saturated fats may not be suitable for everyone, particularly those with existing cardiovascular concerns. Most dietitians recommend consuming ghee in moderation as part of an overall healthy eating pattern rather than treating it as a superfood.

How much desi ghee should you actually eat?

In the Instagram discussion, Rujuta Diwekar said the quantity of ghee should depend on the type of food being consumed. For example, a teaspoon may be enough for dal and rice, while millet-based meals may require slightly more for balance and digestion.

She also pointed out that ghee should complement food rather than overpower it. The idea, according to her, is to improve both nourishment and flavour without excessive consumption.

The nutritionist’s comments have once again reignited debate online around traditional Indian foods and modern diet culture. While many social media users praised her practical approach to eating, others reminded people that dietary needs vary from person to person.

Why traditional Indian eating habits are making a comeback

In recent years, nutrition conversations in India have increasingly shifted towards traditional foods, regional diets and minimally processed ingredients. Experts often point out that older Indian eating patterns relied heavily on balance, seasonal foods and moderate portions rather than extreme food restrictions.

That is partly why voices like Rujuta Diwekar continue to resonate with many people. Her approach encourages people to eat familiar home-cooked meals sensibly instead of fearing foods like rice, ghee or rotis altogether.

For diabetics especially, the larger message remains clear: balanced meals, portion awareness, regular physical activity and professional medical advice matter far more than cutting out single ingredients entirely.

Disclaimer: This article is for informational purposes only and not a substitute for professional medical advice. Always seek the advice of your doctor with any questions about a medical condition.

Celebrity nutritionist Rujuta Diwekar is a strong advocate for traditional Indian eating habits, frequently pushing back against modern low-fat diet trends. Her stance on people with diabetes consuming desi ghee on their rotis is clear: You absolutely should do it.

Rather than treating ghee as an enemy, she views it as an essential tool for managing blood sugar levels, provided it is used correctly.

1. Lowering the Glycemic Index (GI)

The core scientific reasoning behind Diwekar’s recommendation is how macronutrients interact during digestion. A plain wheat roti is primarily a carbohydrate, which the body quickly breaks down into glucose, causing a rapid spike in blood sugar.

Adding a small amount of fat—like desi ghee—to the roti slows down the gastric emptying rate (the speed at which food leaves your stomach). Because digestion is slowed, the glucose from the wheat is released into the bloodstream much more gradually. This lowers the overall glycemic impact of the meal and prevents sudden post-meal blood sugar spikes.

2. Managing Sugar Cravings and Satiety

Ghee contains essential short-chain and medium-chain fatty acids. Healthy fats trigger the release of satiety hormones, helping you feel full and satisfied after a meal. Diwekar notes that adding a teaspoon of ghee to meals reduces mid-afternoon energy slumps and suppresses late-night sweet cravings—a common hurdle in diabetes management.

3. Nutrient Absorption & Gut Health

Many vital nutrients are fat-soluble, meaning the body cannot absorb them without a fat vehicle. The healthy fats in ghee aid the absorption of fat-soluble vitamins (such as Vitamins A, D, E, and K) found in your meals. Additionally, ghee is rich in butyric acid, a short-chain fatty acid that supports the gut lining, improves digestion, and helps reduce systemic inflammation.

The Rule of Moderation: How Much is Right?

While Diwekar champions ghee, she heavily emphasizes proportion and mindfulness over excessive consumption. Ghee should enhance your food, not overpower it.

• The Quantitative Guide: A general benchmark is adding about 1 teaspoon of ghee per meal (on your roti or stirred into dal and rice).

• Listen to the Grain: The amount of ghee can vary by grain. While a standard wheat roti needs just a light smear, millets like bajra or jowar are naturally drier and rougher, meaning they may require slightly more ghee to aid digestion.

• Ditch the Processed Foods instead: Diwekar argues that the true culprits behind modern metabolic issues are ultra-processed packaged foods, trans fats, and sedentary lifestyles—not traditional, home-cooked fats.

  
  

A Balanced Perspective: While healthy fats help stabilize blood glucose, ghee is highly calorie-dense. If you are managing diabetes alongside complex cardiovascular conditions or specific lipid profile concerns, it is always wise to coordinate your overall daily fat intake with your physician or clinical diabetologist.

Share:

Read More

Sensex, Nifty down: Why is stock market falling today?

 

Stock markets opened lower on Wednesday as investors remained worried about rising crude oil prices, the falling rupee, foreign investor selling and growing tensions in West Asia.

The BSE Sensex fell 389.19 points, or 0.52%, to 74,811.66 in early trade, while the NSE Nifty50 dropped 107.90 points, or 0.46%, to 23,510.10 as of 9:39 am.

The market weakness came despite some support from IT stocks, with broader sentiment remaining cautious due to global uncertainty and pressure on India's economy.

RUPEE HITTING RECORD LOW BECAME THE BIGGEST TRIGGER

One of the biggest reasons behind today's fall was the sharp decline in the rupee.

The rupee fell to a fresh lifetime low of 96.8650 against the US dollar on Wednesday, crossing its earlier record low of 96.6150 touched in the previous session.

The currency has now weakened around 6% since the Iran conflict began in late February.

The falling rupee is worrying investors because it increases India's import costs, especially crude oil imports, and raises inflation risks for the economy.

A weaker rupee also makes foreign investors nervous, often leading to further selling in equity markets.

OIL PRICES REMAIN ABOVE USD 110

Another major pressure point for markets remains crude oil prices.

Brent crude was trading around USD 110.70 per barrel, while WTI crude stood near USD 107.77 per barrel on Wednesday morning.

Although oil prices eased slightly during the session, they continue to remain at elevated levels because of concerns around the US-Iran conflict and possible disruptions in global energy supplies.

Investors are closely tracking developments after US President Donald Trump renewed threats to strike Iran again.

The prolonged conflict has pushed global energy prices sharply higher over the past few months, creating worries around inflation and economic growth worldwide.

For India, which imports nearly 85% of its crude oil needs, high oil prices directly affect inflation, the trade deficit and the rupee.

FOREIGN INVESTORS CONTINUE TO PULL MONEY OUT

Foreign institutional investor selling has also remained a key reason behind market weakness.

Overseas investors have pulled out more than USD 22 billion from Indian stocks and bonds since the Iran war began, according to available data.

Analysts say rising US bond yields, expensive crude oil and concerns around India's economic outlook have made foreign investors cautious about emerging markets like India.

GLOBAL MARKETS ALSO WEAK

Asian markets also traded lower on Wednesday as investors globally reacted to rising US bond yields and geopolitical uncertainty.

Higher US Treasury yields have reduced risk appetite globally, as investors move money towards safer dollar assets offering better returns.

This has hurt emerging market equities, including India.

WHICH SECTORS FELL THE MOST?

Most sectoral indices were trading in the red during early trade.

Nifty PSU Bank fell 1.14%, while Nifty Realty dropped 1.32%. Nifty Media declined 1.89% and Nifty Auto slipped 0.86%.

Banking, consumer and metal stocks also remained under pressure.

However, some defensive sectors showed resilience. Nifty Pharma rose 0.55%, while Nifty Healthcare gained 0.33%.

IT stocks also managed to stay slightly positive, with Nifty IT rising 0.31%.

STOCKS THAT DRAGGED THE MARKET

Among Sensex and Nifty stocks, Tata Steel was among the biggest losers, falling 2.51%.

Other major losers included BEL, down 1.69%, Maruti, down 1.33%, SBI, down 1.11%, M&M, down 1.41%, Eternal, down 1.11%.

Banking stocks also remained weak, with Kotak Mahindra Bank, ICICI Bank and HDFC Bank trading lower.

On the positive side, Infosys, TCS, Reliance Industries and Tech Mahindra offered some support to the market.

INDIA VIX SHOWS INVESTOR FEAR

India VIX, often called the market fear gauge, rose 3.22% to 19.28.

A rising VIX usually indicates growing nervousness among traders and expectations of higher market volatility in the coming sessions.

Analysts say investors are likely to remain cautious until there is more clarity around:

• the Iran conflict,
• crude oil prices,
• rupee movement,
• and foreign investor flows.

WHY MARKETS MAY REMAIN VOLATILE

Markets are currently dealing with multiple global and domestic pressures at the same time.

High crude oil prices are increasing inflation risks, the rupee is falling to fresh lows, and foreign investors continue to pull money out of Indian markets.

At the same time, rising US bond yields and geopolitical uncertainty are keeping global sentiment weak.

Unless crude oil prices cool sharply or tensions in West Asia ease meaningfully, analysts believe Indian markets may continue to remain volatile in the near term.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

Indian equity benchmarks, Sensex and Nifty 50, opened with a steep gap-down on Wednesday, May 20, 2026—with the Sensex sliding over 600 points and Nifty tumbling below 23,450 in early trade.

While the markets staged a dramatic recovery later in the day to settle slightly in the green (as oil prices cooled slightly and domestic buyers stepped in), the early morning rout highlights deep macroeconomic anxieties.

Five core factors are driving the current volatility and pressure on Dalal Street:

1. Rupee's Free Fall Near 97/USD

The biggest single trigger for today's market anxiety was the Indian rupee plunging to a fresh lifetime low of 96.86 against the US dollar. The domestic currency has depreciated roughly 6% since the US-Iran conflict escalated in late February. A weak rupee hurts equity markets because it increases the cost of imports and signals macroeconomic vulnerability, prompting foreign investors to exit.

2. Geopolitical Tensions & Crude Oil Pressures

The ongoing conflict between the US and Iran—magnified by recent deadlock in talks and a drone attack near a UAE nuclear power plant—continues to keep global energy supply routes under threat. Even though crude dipped marginally mid-day, Brent crude remains stubbornly above $110 per barrel. For India, which imports nearly 85% of its crude oil needs, sustained triple-digit oil prices pose major inflation and fiscal deficit risks.

3. Skyrocketing US Bond Yields

Global debt markets have witnessed a heavy selloff, pushing yields to multi-year highs. The US 30-year Treasury yield surged to 5.20%, and the 10-year yield touched 4.67%. When US bond yields rise to these levels, global institutional capital shifts out of riskier emerging equity markets like India and back into safer, high-yielding US dollar assets.

4. Relentless Foreign Fund Outflows (FII Selling)

Driven by risk aversion, expensive crude, and high US yields, Foreign Institutional Investors (FIIs) have been aggressively pulling money out of India. FIIs dumped shares worth over ₹2,457 crore in just the previous session, extending a massive selling streak that has seen over $22 billion withdrawn since the geopolitical crisis began.

5. Domestic Inflation & Earnings Fears

While corporate earnings for the final quarter of FY26 showed decent resilience, the market is turning highly cautious about Q1 FY27. Analysts are pricing in potential earnings downgrades due to rising Wholesale Price Index (WPI) readings and the gradual pass-through of recent fuel price hikes (domestic petrol and diesel prices were recently raised by ₹3 per litre) to consumers.

The Silver Lining: The sharp mid-day recovery today was largely led by a defensive rally in IT stocks (like Infosys and TCS), which benefit from a weaker rupee due to their export-driven dollar revenues, alongside a marginal cooling off in Brent crude following recent statements regarding trade route stability.

Share:

Read More