Indian equity markets extended their losing streak for a third straight session on Wednesday, as rising crude oil prices, escalating US-Iran tensions and a sell-off in global markets weighed heavily on investor sentiment.
The benchmark BSE Sensex fell 373.93 points, or 0.49 per cent, to close at 76,570.35. The NSE Nifty50 declined 141.35 points, or 0.59 per cent, and settled at 23,914.45, slipping below the closely watched 24,000 mark.
The session was considerably more volatile than the final numbers suggested. The Sensex opened nearly 682 points lower at 76,262, while the Nifty started the day 220 points down at 23,835.50. At one point, the Sensex dropped more than 800 points and the Nifty moved below 23,800 as investors reacted to growing concerns over the global economic outlook.
The biggest pressure came from the sharp rise in crude oil prices following renewed escalation in the US-Iran conflict. Brent crude moved towards $97 a barrel during the day, raising concerns for oil-importing economies such as India. Higher crude prices can increase the country’s import bill, put pressure on the rupee and make inflation management more difficult.
India imports a large share of its crude oil requirements, making the domestic economy particularly sensitive to sustained oil price increases. Investors are therefore closely watching developments in West Asia and their possible impact on energy supplies.
The oil shock has also changed expectations around interest rates. A prolonged increase in crude prices could keep inflation elevated, potentially limiting the room available to central banks to reduce borrowing costs. At the same time, higher US Treasury yields have made global investors more cautious about riskier assets such as emerging-market equities.
The pressure was visible across most sectors on the domestic market. The Nifty IT index was the worst-performing major sectoral index, falling around 2.5 per cent. Realty declined 2.14 per cent and the Auto index lost 1.88 per cent. Media, cement and financial services stocks also remained under pressure, while pharma, healthcare and PSU banks saw relatively smaller declines.
Auto stocks were particularly weak after August sales data and broader concerns about demand weighed on sentiment. Hero MotoCorp fell sharply, declining 4.6 per cent, while other automobile stocks also faced selling pressure. The Nifty Auto index ended among the weakest sectoral performers.
Information technology stocks also struggled as investors continued to worry about higher global bond yields and their impact on valuations. Wipro fell around 2.5 per cent, while HCL Technologies and Infosys also ended lower.
Despite the broad sell-off, a few large-cap stocks managed to buck the trend. Adani Ports emerged among the leading Sensex gainers, while Bajaj Finserv, Power Grid, NTPC and Titan also recorded gains. Reliance Industries and L&T were among the other stocks that showed resilience during the session.
On the losing side, Eicher Motors and Wipro were among the biggest drags on the benchmark. HDFC Bank, Mahindra & Mahindra and HCL Technologies also declined sharply. The weakness in heavyweight stocks added to the pressure on both the Sensex and Nifty.
The broader market did not escape the selling either. Mid-cap and small-cap stocks declined as investors reduced exposure to riskier assets. The Nifty Midcap 50 fell about 0.70 per cent, reflecting the cautious mood beyond the benchmark indices.
Global cues remained negative throughout the day. Asian markets fell sharply, with Japan’s Nikkei declining 1.6 per cent and South Korea’s Kospi dropping 2.87 per cent. Hong Kong’s Hang Seng and China’s Shanghai Composite also traded lower. The weakness followed losses on Wall Street, where investors were already concerned about inflation and rising oil prices.
The latest decline means Indian benchmark indices have now fallen for three consecutive sessions. According to market data, the Sensex and Nifty have lost roughly 5 per cent since the Iran conflict began more than six months ago.
The rupee, meanwhile, remained relatively stable despite the pressure from higher crude prices and US bond yields. The Indian currency closed at around ₹94.97 against the US dollar, compared with ₹94.95 in the previous session. Continued intervention by the Reserve Bank of India has helped limit volatility in the currency market.
Foreign and domestic institutional flows offered some support to the market. Foreign Institutional Investors were net buyers of around ₹1,143 crore, while Domestic Institutional Investors bought equities worth about ₹1,847 crore. However, these purchases were not enough to offset the broader risk-off sentiment created by global developments.
The market is now entering a period where global developments could continue to dictate short-term direction. Investors will closely track crude oil prices, developments in the US-Iran conflict, US Treasury yields and upcoming inflation and economic data.
The immediate concern is whether the rise in oil prices will prove temporary or become a sustained shock. A prolonged period of expensive crude could affect India’s inflation outlook, corporate margins and economic growth while increasing pressure on the country’s external finances.