Indian equity markets came under heavy selling pressure on Thursday, with the benchmark indices recording their steepest single-session decline in 10 weeks.
The Nifty 50 fell 1.64% to 23,063.10, while the Sensex declined 1.67%, or more than 1,200 points, to 73,580.54. Both indices recorded their biggest single-day fall since July 8.
The sell-off also weighed on the rupee, which weakened 23 paise to close provisionally at Rs 95.96 against the US dollar.
Crude oil prices trigger market concerns
The primary trigger for Thursday’s sell-off was a sharp rise in crude oil prices.
Brent crude rose 2.4% to $105.60 a barrel, raising concerns about inflation and the broader impact of higher energy costs on the Indian economy.
India is heavily dependent on crude oil imports, making a sustained rise in international oil prices an important factor for domestic inflation, the trade balance and corporate costs.
“Crude remains a key variable for India, and the spike in oil prices after briefly slipping below $100 revives supply concerns just as domestic markets found its footing,” Reuters quoted Hemang Gor, senior research analyst of derivatives and technical research at Axis Direct, as saying.
Iran-US tensions add to oil supply worries
Geopolitical uncertainty further intensified concerns over crude supplies.
Iranian President Masoud Pezeshkian told the United Nations General Assembly that Tehran would not surrender to US pressure. Brent crude subsequently moved higher.
Later, an adviser to Iran’s Supreme Leader Mojtaba Khamenei warned that the geographical scope of the conflict could expand to the Indian Ocean if the US launches another attack.
The comments added to concerns over potential disruptions to global energy and shipping routes.
At the same time, diplomatic talks between the US and Iran showed limited signs of progress, adding another layer of uncertainty for investors and the oil market.
Broad-based selling across sectors
The market decline was not limited to a handful of stocks. All 16 major sectors ended Thursday’s session in the red.
Small-cap stocks declined 1.5%, while mid-cap stocks fell 2.3%.
Banks and financial stocks were among the major losers, with the sectors falling around 2% and 2.4%, respectively.
The broad-based nature of the decline indicated that investor concerns extended beyond the immediate impact of crude oil prices.
What could markets watch next?
Investors are likely to closely monitor crude oil prices, developments in the US-Iran conflict and diplomatic efforts to ease tensions.
The movement of the rupee and global risk sentiment could also influence domestic equities in the near term.
From a technical perspective, Axis Direct’s Hemang Gor said the market’s undertone remained “cautiously bearish” as long as the Nifty traded below 23,500.