Mumbai Rising crude oil prices put a brake on the Indian stock market on Monday amid geopolitical tensions and global economic uncertainties. Heavy selling was seen in the domestic market on the first trading day of the week. BSE Sensex closed at 72,771.72, down 1,124.02 points or 1.52 percent. At the same time, Nifty50 fell by 360.25 points or 1.56 percent to 22,780.25.
The Sensex opened at 73,734.83, down 160.91 points or 0.21 percent from the previous closing level of 73,895.74. At one point during trading, it fell 1,179.51 points or 1.59 percent to reach the day's low of 72,716.23.
Similarly, Nifty50 opened at 23,064.90, falling 0.32 percent from the previous closing level of 23,140.50. During trading, it fell by 378.3 points or 1.63 percent and reached a low of 22,762.20.
Iran crisis and expensive oil increased concerns
The main reason behind the decline in the market was the increased economic uncertainty at the global level along with high prices of crude oil. Global bond yields also jumped after US President Donald Trump rejected Iran's latest proposal. This weakened investor confidence and increased selling in the market.
Pressure was also seen in the broader market. Nifty Midcap 100 fell 1.63 percent and Nifty Smallcap 100 fell 1.85 percent.
PSU banks are under maximum pressure
Talking about sector wise business, Nifty PSU Bank was the worst performing sector. There was weakness in Nifty Private Bank and Nifty Bank also. In comparison, the lowest decline was recorded in Nifty IT.
In Nifty50, except Dr. Reddy's Laboratories, Infosys and HDFC Life, all other stocks closed with a decline. Among these, shares of TMPV, Jio Financial Services, PowerGrid and L&T fell the most.
8 lakh crore decrease in market capitalization
The sharp fall in the stock market also affected the total market capitalization of the companies. The market capitalization of all the companies listed on BSE declined from Rs 482 lakh crore to Rs 474 lakh crore on Friday. That means investors' wealth decreased by about Rs 8 lakh crore in a single trading day.
Asian markets also in red mark
There was pressure in the markets at the global level also. Most Asian markets closed with losses. South Korea's index was down nearly 2 percent and Japan's Nikkei was down 0.10 percent. China's markets also declined by more than 1 percent.
Why is expensive crude oil a concern for India?
Due to no solution to the West Asia crisis, there are concerns regarding the supply of crude oil. Higher oil prices may increase the challenge of inflation and current account deficit for India, because India is the third largest oil importer in the world.
On Monday, Brent crude futures rose 2.2 percent to $106.6 a barrel and US WTI crude rose 1.45 percent to $93.76 a barrel.
Selling in the bond market also started again amid rising oil prices and fears of rising inflation.
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