Mumbai, March 9 – The Sensex and Nifty indices plunged by nearly 2% on Monday, as soaring crude oil prices and weak global trends due to the worsening situation in West Asia triggered a sharp sell-off in the stock market.
In addition, the continued exodus of foreign funds and the weakening of the rupee against the US dollar also weighed heavily on investor sentiment, traders said.
The 30-share BSE Sensex fell by 1,352.74 points, or 1.71%, to close at 77,566.16, marking its second day of decline. During the day, the benchmark crashed by 2,494.35 points, or 3.16%, to 76,424.55.
A total of 3,379 stocks declined, while 972 advanced and 185 remained unchanged on the BSE.
Similarly, the 50-share NSE Nifty dropped by 422.40 points, or 1.73%, to end at 24,028.05. Intra-day, it tumbled by 752.65 points, or 3.07%, to 23,697.80.
"Selling intensified as the conflict in the Middle East entered its second week with no signs of de-escalation. The sustained rise in crude prices is likely to complicate the RBI's policy outlook by keeping inflation elevated and posing risks to growth. Additional concerns in the US about potential caps on redemptions in specific funds also contributed to the sell-off," Vinod Nair, Head of Research, Geojit Investments Limited, said.
UltraTech Cement was the biggest loser in the Sensex pack, tumbling by 5.23%, followed by Maruti, Mahindra & Mahindra, State Bank of India, InterGlobe Aviation, and Adani Ports, among the major laggards.
In contrast, Reliance Industries, Sun Pharma, Infosys, Tech Mahindra, and HCL Tech were the gainers.
Brent crude, the global oil benchmark, jumped by 12.34% to USD 104.1 per barrel.
The rupee crashed to its all-time closing low of 92.35 (provisional) against the US dollar on Monday, losing 53 paise during the session, as global crude oil prices saw a sharp spike, and the greenback strengthened amid worsening conflict in West Asia.
"Indian equity markets ended the session sharply lower after opening with a steep gap-down of nearly 3%, as weak global cues and the deepening conflict in the Middle East weighed heavily on investor sentiment.
"The escalation in geopolitical risks pushed crude oil prices above the USD 100 per barrel mark and drove the Indian rupee to a record low against the US dollar, amplifying concerns around inflation and external balances," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.
The BSE smallcap select index dived by 2.11%, and the midcap select index tanked by 2.08%.
All BSE sectoral indices ended lower. The BSE mid-small private banks quality tilt tumbled by 4.50%, PSU Bank (3.92%), auto (3.89%), services (3.37%), bankex (3.16%), oil & gas (3.11%), and Private Banks index (2.89%).
At the NSE, Nifty auto sank by 4.10%, Nifty PSU Bank dived by 3.97%, Private Bank tumbled by 2.78%, and metal (2.60%).
"Investor sentiment remained fragile due to escalating geopolitical tensions in the Middle East, which triggered a sharp surge in crude oil prices, raising concerns over inflation and economic growth. The spike in oil prices, weakness in the rupee, and continued foreign institutional investor (FII) selling further intensified the sell-off in domestic equities," Ajit Mishra - SVP, Research, Religare Broking Ltd, said.
In Asian markets, South Korea's Kospi tumbled by 5.96%, and Japan's Nikkei 225 dropped by 5.20%. Shanghai's SSE Composite index and Hong Kong's Hang Seng index also closed in negative territory.
Markets in Europe were trading significantly lower in mid-session deals.
The US market ended sharply lower on Friday.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 6,030.38 crore on Friday, according to exchange data. Domestic Institutional Investors (DIIs) bought stocks worth Rs 6,971.51 crore in the previous trade.
On Friday, the Sensex tumbled 1,097 points or 1.37% to settle at 78,918.90. The Nifty dropped 315.45 points or 1.27% to end at 24,450.45.
Last week, the BSE benchmark tanked 2,368.29 points or 2.91%, and the Nifty declined 728.2 points or 2.89%.
"Fluctuations in crude oil prices are expected to weigh on sectors where oil is a key input cost. Oil marketing companies, aviation, paints, and cement stocks could face pressure due to rising and volatile crude prices...Banking stocks came under pressure amid concerns that higher crude prices could weigh on economic growth and tighten liquidity conditions," Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.
