Sensex plunges over 800 pts, Nifty slips below 24,000; what spooked market sentiment

Indian equities witnessed sharp selling on Wednesday, with the benchmark indices - Sensex and Nifty - falling as much as 0.9% in early trade, as surging crude oil prices, rising bond yields and escalating tensions between the US and Iran weighed on sentiment. The decline was led by auto, realty and IT stocks, while the broader market also weakened, signalling a broad-based risk-off move.

The BSE Sensex declined as much as 808 points, or 1%, to hit a low of 76,135, while the NSE Nifty plunged 269 points, or 1.1%, to touch a low of 23,789 in the first hour of trade.

At the time of reporting, the 30-share Sensex was down 623.71 points, or 0.81%, at 76,320.57, while the Nifty 50 was lower 0.92% at 23,835.25.

The broader market also witnessed selling, with the Nifty Midcap 100 declining 1.20% and the Smallcap 100 falling 0.89%.

The India VIX, often referred to as the market’s fear gauge, rose 2.47% to 11.78, signalling a modest increase in investor nervousness.

28 out of 30 Sensex stocks in red

The 30-share Sensex pack saw broad-based selling, with 28 index constituents trading in the red. IndiGo was the biggest loser, falling 2.44%, while Eternal declined 1.94%. UltraTech Cement, M&M and Asian Paints fell 1.57%, 1.51% and 1.48%, respectively, and were among the notable losers.

Other major laggards included Bajaj Finance (-1.30%), HDFC Bank (-1.13%), HCLTech (-1.11%) and Maruti Suzuki (-1.03%). Tech Mahindra, NTPC, BEL and Tata Steel also traded lower.

The weakness was almost entirely one-sided, with Adani Ports and Sun Pharma the only gainers in the Sensex pack, rising 0.39% and 0.36%, respectively.

Auto, realty, IT emerge as top laggards

The Nifty Auto index was the biggest sectoral loser, falling 2.08%, reflecting heightened pressure on economically sensitive stocks. Realty followed with a 1.86% decline, while IT fell 1.44% and Media dropped 1.37%.

Consumer Durables declined 1.09%, while Financial Services and Metal indices fell 0.99% and 0.98%, respectively. The FMCG index slipped 0.88%, while Oil & Gas declined 0.66%.

Banking stocks were relatively more resilient, with Nifty Private Bank down 0.56% and PSU Bank lower by 0.44%. Pharma was the best-performing major sector, falling just 0.32%.

What fuelled the sell-off?

The immediate trigger for the risk-off move was the escalation in US-Iran tensions, which sent crude oil prices sharply higher. Brent crude jumped around 5% overnight to $96 a barrel, raising concerns over India’s import bill, inflation and corporate margins.

V K Vijayakumar, Chief Investment Strategist, Geojit Investments, said the market is “delicately poised between domestic tailwinds and external headwinds”. While strong Q1 GDP growth, GST collections, credit growth, automobile numbers and improving earnings prospects remain supportive, he said geopolitical risks are weighing on sentiment.

Vijayakumar said the rise in crude prices is not an immediate major threat given India’s current account deficit of around 0.5% and forex reserves of about $730 billion. However, he identified rising US bond yields as the bigger risk, warning that a rise in the 10-year US Treasury yield towards 5% could trigger a sharp correction in global equities.

Ponmudi R, CEO of Enrich Money, said the combination of surging crude prices and rising global bond yields is likely to keep Indian markets under pressure. Higher yields make equities relatively less attractive and raise the discount rate used to value future corporate cash flows.

Renewed military exchanges between the US and Iran have also raised concerns over the Strait of Hormuz, a critical route for global oil shipments. Any prolonged disruption could keep crude prices elevated, add to inflationary pressures and reinforce expectations of tighter global monetary conditions.

The global risk-off mood was reflected in overnight trading, with US equities ending sharply lower and Asian markets extending the decline. Japan’s Nikkei 225 and South Korea’s KOSPI both fell more than 2% in early trade.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)