Why Did Indian Stock Markets Plunge? Insights on the Recent Sell-Off
Market Overview: A Significant Drop
Mumbai: The equity market faced a significant downturn on Monday, with benchmark indices Sensex and Nifty plummeting nearly 2 percent. This decline was primarily driven by rising crude oil prices and unfavorable global market trends, exacerbated by escalating tensions in West Asia.
Traders noted that the ongoing outflow of foreign funds and the depreciation of the rupee against the US dollar further dampened investor confidence.
The BSE Sensex fell by 1,352.74 points, or 1.71 percent, closing at 77,566.16, marking its second consecutive day of losses. At one point during the day, it had dropped by 2,494.35 points, or 3.16 percent, reaching a low of 76,424.55.
Similarly, the NSE Nifty decreased by 422.40 points, or 1.73 percent, finishing at 24,028.05. During intraday trading, it saw a decline of 752.65 points, or 3.07 percent, hitting 23,697.80.
Among the major losers in the Sensex, UltraTech Cement saw the largest drop of 5.23 percent, followed by other significant players like Maruti, Mahindra & Mahindra, State Bank of India, InterGlobe Aviation, and Adani Ports.
Conversely, companies such as Reliance Industries, Sun Pharma, Infosys, Tech Mahindra, and HCL Tech managed to record gains.
Brent crude oil prices surged by 12.34 percent, reaching USD 104.1 per barrel.
"The Indian equity markets closed sharply lower after a significant gap-down opening of nearly 3 percent, influenced by weak global indicators and the escalating conflict in the Middle East, which heavily impacted investor sentiment," stated Ponmudi R, CEO of Enrich Money, a trading and wealth management firm.
"The rise in geopolitical tensions has pushed crude oil prices above the USD 100 per barrel threshold and caused the Indian rupee to hit a record low against the US dollar, raising concerns about inflation and external balances."
In Asian markets, South Korea's Kospi fell by 5.96 percent, while Japan's Nikkei 225 dropped by 5.20 percent. The Shanghai Composite and Hong Kong's Hang Seng indices also ended in the red.
European markets were also trading significantly lower during mid-session.
The US market experienced a sharp decline on Friday.
According to exchange data, Foreign Institutional Investors (FIIs) sold equities worth Rs 6,030.38 crore on Friday, while Domestic Institutional Investors (DIIs) purchased stocks worth Rs 6,971.51 crore in the previous session.
On Friday, the Sensex had already dropped by 1,097 points, or 1.37 percent, closing at 78,918.90, while the Nifty fell by 315.45 points, or 1.27 percent, to end at 24,450.45.
Last week, the BSE benchmark index fell by 2,368.29 points, or 2.91 percent, and the Nifty decreased by 728.2 points, or 2.89 percent.