Indian stock markets remained highly volatile over recent sessions, witnessing a sharp reversal after a strong rally, as global uncertainties and rising oil prices dampened investor sentiment.
In the previous session, benchmark indices surged significantly, with the Sensex jumping over 1,700 points and the Nifty rising around 2.3%. The rally was largely driven by easing concerns around geopolitical tensions and a decline in crude oil prices. Improved global cues and a drop in market volatility, reflected in a lower India VIX, also boosted investor confidence, leading to broad-based buying across sectors.
However, the positive momentum did not sustain. On April 2, markets opened sharply lower, with the Sensex plunging more than 1,500 points in early trade, while the Nifty slipped below the 22,250 mark. The sudden downturn came amid renewed geopolitical concerns after fresh signals from the United States indicated that tensions involving Iran could persist, reducing hopes of a quick resolution.
A key factor weighing on markets was the sharp rise in crude oil prices, which climbed above $106 per barrel. Higher oil prices are a concern for India as they can increase inflation and widen the trade deficit, impacting overall economic stability. This triggered widespread selling across sectors such as banking, auto, and pharmaceuticals, reflecting a clear risk-off sentiment among investors.
Foreign institutional investors (FIIs) also continued to sell Indian equities, adding further pressure on the indices. Weakness in global markets contributed to the negative sentiment, while some global brokerages turned cautious on Indian equities due to concerns over rising energy costs and their potential impact on corporate earnings.
Despite the sharp equity sell-off, the Indian rupee showed resilience and strengthened against the US dollar, supported by measures from the Reserve Bank of India aimed at curbing speculative activity.