The relief rally on Dalal Street proved short-lived as soaring crude oil prices and weak global cues sent benchmark indices tumbling on Monday. Heavy selling in private banks, IT and FMCG stocks added to the pressure, snapping a two-day winning streak.
The Sensex plunged 876.37 points, or 1.17%, to close at 73,852.90, while the Nifty shed 257.20 points, or 1.11%, to settle at 22,888.95. The reversal came after both indices posted their strongest weekly gains in six months last week, raising hopes of a sustained recovery. Retail investors lost Rs 4.7 lakh crore in Monday’s session.
With Brent crude hovering near $110 a barrel, concerns over imported inflation, corporate margins and India’s external balances resurfaced. Persistent foreign investor selling and elevated US bond yields further dampened sentiment.
“While markets witnessed resilience last week due to falling crude prices and a strengthening rupee, selling returned amid weak global cues and persistent FII outflows from domestic equities,” said Ankur Punj, Managing Director, Equirus Wealth.
He warned that volatility could persist as high oil prices, uncertainty surrounding the US-Iran conflict and rising US bond yields push investors towards safe-haven assets at the expense of equities.
The sell-off was broad-based. On the BSE, declining stocks outnumbered gainers by more than two to one, with 3,092 shares ending lower against 1,329 advances. The Nifty Midcap 100 and Smallcap 100 indices lost 1.09% and 1.01%, respectively, signalling a wider retreat from risk.
Private banks, financial services, FMCG and IT stocks bore the brunt of the selling. Concerns over interest margins and quarterly earnings weighed on private lenders. HDFC Bank fell 2.31% while YES Bank continued its losing streak, falling 3.54%. Public-sector banks, however, bucked the trend, with SBI, Punjab National Bank, Union Bank of India and Bank of Baroda attracting buying interest.
“Private banks remained under pressure following quarterly earnings and concerns over margin trends, while PSU banks bucked the broader weakness, supported by expectations of relatively resilient margins and asset quality,” said Vinod Nair, Head of Research, Geojit Investments.
Ajit Mishra, SVP – Research at Religare Broking, said geopolitical tensions and supply uncertainties had kept Brent crude elevated at around $107-108 a barrel, stoking fears of imported inflation.
The ongoing corporate earnings season has added another layer of uncertainty. Investors are closely tracking profitability, margin pressures and management commentary for clues on whether companies can withstand rising input costs and a challenging global environment, Mishra said.
Foreign portfolio investors continued to pull money out of Indian equities, selling shares worth Rs 1,148.64 crore on Monday. Domestic institutional investors provided some support, purchasing shares worth Rs 3,201.19 crore, according to provisional exchange data.