After a 1-day relief rally on Wednesday, the markets made an about turn yet again crashing to nearly 1-year lows on Thursday.
The sharp spike in crude rates pulled the Sensex and the Nifty to their lowest level in 11 months. The BSE Sensex plummeted 2,496.89 points, or 3.26%, to close at 74,207.24, and the NSE Nifty mirrored the collapse, ending at 23,002.15, down 775.65 points, or 3.26%.
Decline led by surge in crude prices
Crude prices spiked following reports of attacks on the Middle East’s key energy infrastructure. The price of Brent crude, the global benchmark for oil, climbed past the $118/bbl mark in Thursday’s intraday trade, while the US benchmark, West Texas Intermediate, surged past the $99/bbl mark in today’s session.
“The domestic market ended sharply lower, giving up the gains of the past three days, as a series of attacks on energy infrastructure in the Middle East triggered a renewed spike in oil prices and dampened investor sentiment,” said Vinod Nair, Head of Research, Geojit Investments.
He added that the US Fed adopted a hawkish stance, signalling higher inflation amid elevated geopolitical uncertainty.
“Relentless FII selling pushed the rupee to a fresh all-time low, while concerns over rising input costs, potential fuel supply disruptions, and slowdown fears led to broad-based selling. Stock-specific pressure was seen in HDFC Bank following the exit of its part-time chairman. Current volatility may persist in the near term due to elevated oil prices and the new wave of attacks in the Middle East,” Nair added.
ONGC emerges as the only gainer
Within the Nifty 50 index, 49 constituents extended declines, except for ONGC, which emerged as the only gainer, ending the trade in the green, up 1.5%.
Heavy sell-off in financial stocks
Heavy sell-off was seen in financial stocks, with losses led by financial stocks. Shriram Finance dropped by more than 7%, making it the biggest loser on the Nifty. HDFC Bank also fell by more than 5%.
Shriram Finance and Eternal emerged as the top laggards in today’s session.
Heavyweights plunge
Other notable heavyweights, including SBI, HDFC Life Insurance, Reliance Industries, and Bharti Airtel, also declined by more than 1%.
Autos nosedive-Nifty Auto leads sectoral declines
Auto stocks too took a nosedive, with M&M declining by more than 5%. Bajaj Auto and Tata Motor Passenger Vehicles also fell by over 4%.
The Nifty Auto index fell 4.25%, ending at 24,509.90 points, with Ashok Leyland emerging as the top loser, down 5.63%.
M&M, Samvardhana Motherson, and Bharat Forge also fell by more than 5%. The surge in crude prices led to the fall in auto stocks.
Nifty PSU Bank: all constituents end in red
The Nifty PSU Bank index was down 2.91%, or 251.65 points, ending at 8,410.30 points. The Central Bank of India and Bank of India bore the brunt, falling by more than 4%. All 12 constituents of the index ended in the red.
Nifty Cement in green
While the Nifty Cement index rose 1.44%, ending at 14,588.22 points. The advance was led by only one stock, Star Cement. The share price of the latter rose 0.48%, while the remaining constituents of the index ended in the red.
The equity markets have been under pressure over the declines in the Indian rupee. Trading across domestic currency markets was closed today on account of the local festival of Gudi Padwa.
What’s the outlook for tomorrow ?
Speaking on the outlook for the markets going forward, Shrikant Chouhan, Head Equity Research at Kotak Securities said, “We are of the view that the market has completed one leg of the pullback rally, and we could see some profit booking at higher levels.”
He noted that for day traders, buying on intraday dips and selling on rallies would be the ideal strategy. “On the downside, 23,600/76000 and 23,500/75700 would be the immediate support zones, while 23,950–24,000/77000-77300 could act as crucial resistance areas for the bulls. However, below 23,500/75700, the sentiment could change. If the index falls below this level, traders may prefer to exit their long positions,” the analyst said.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
