New Delhi: India’s benchmark Sensex slumped to its lowest in 32 months Thursday as surging oil prices, rising global bond yields and a weak er rupee heightened inflation concerns, adding to pressure from the central bank’s hawkish rate increase a day earlier.
The Nifty 50 fell 1.64% to 22,231.8, and Sensex shed 1.44% to 71,593.24. This was 50-stock index’s lowest close in 18 months. The decline came as foreign investors stepped up selling, offloading a net 469.9 billion rupees ($4.86 billion) in nine days and taking year-to-date outflows to a record $30.4 billion.
The benchmark 50-stock index has lost nearly 15% year-to-date, in contrast to MSCI’s emerging markets index’s 23% jump fuelled by fund flows into AI-linked stocks. The rout underscores fears that tighter domestic policy, elevated crude prices and relentless foreign selling could prolong the pressure on Indian equities, which have already sharply underperformed global peers this year.
The Nifty 50 and Sensex also slipped back into oversold territory after briefly recovering last week, with their relative strength indexes falling below 30, signalling heavy selling. All 16 major sectors fell Thursday. Small-caps and mid-caps lost 2.3% and 2.5%, respectively.
The three heaviest benchmark stocks, HDFC Bank ICICI Bank and Reliance Industries fell 1.5%, 0.6% and 2.5%, respectively. “Markets are currently under pressure from a web of interconnected factors, rising global bond yields on inflation concerns, a weakening rupee and sustained foreign investor outflows, all of which are, at their core, linked to elevated oil prices,” said G Chokalingam, founder and head of research at Equinomics Research.
Brent crude surged 4% to over $104 a barrel as Gulf shipping attacks and a US hurricane intensified supply concerns. Tata Consultancy Services (TCS) fell 0.2 per cent ahead of its September-quarter earnings due after market close.
Analysts expect TCS to post an 11.2 per cent year-on-year rise in quarterly revenue and a 14.2 per cent uptick in profit. Paytm, One Mobikwik and Pine Labs fell 5.2 per cent, 4.5 per cent and 4.4 per cent on reports that the planned October 15 rollout of merchant fees on certain digital-payment transactions could be delayed by a few months.
Significantly, the Reserve Bank of India (RBI) had raised its benchmark repo rate by 25 basis points to 5.5% Wednesday and signalled more increases as it aims to tackle the uptick in inflation.