Benchmark equity indices slumped by about 1% on Wednesday as Brent crude prices surged 3% to breach the $100-per-barrel mark, reaching $100.68, amid renewed escalation in the Middle East conflict. The Indian rupee also weakened by 27 paise, or 0.29%, to close below the 95-mark at 95.1012. Over the past two sessions, the currency has depreciated by 0.65%.
“A relentless four-day surge in global oil prices has reignited inflationary fears for India, pushing the rupee into defensive territory. However, swift intervention by the Reserve Bank of India through onshore dollar sales, coupled with expectations of central bank sell-buy swaps, helped the local currency trim its early losses,” said Dilip Parmar, Senior Research Analyst, HDFC Securities.
Oil prices extended their gains for a fourth consecutive day amid the latest escalation in the Middle East. US forces destroyed five Iranian tankers carrying crude after two attempts to strike a US Navy warship with ballistic missiles.
The Sensex tanked 813.35 points, or 1.08%, to close at 74,764.23, while the Nifty plunged 203.60 points, or 0.86%, to settle at 23,431.50, marking their third consecutive session of declines. Indian benchmarks were the worst performers among major Asian equity indices on Wednesday.
“Today’s market sell-off reflects a combination of rising geopolitical risks, crude oil rising above the $100-per-barrel mark, rupee weakness and renewed FII selling,” said Vikram Kasat, Chief Business Officer – Advisory and Dealing, PL Capital.
“Going ahead, volatility is likely to remain elevated until there is clarity on the Middle East situation and crude prices. Investors should remain selective, focus on quality large-caps and avoid aggressive positioning until sentiment stabilises,” Kasat added.
Over the past three sessions, the Sensex and Nifty have fallen 2.29% and 1.95%, respectively.
Moreover, the indices declined in seven of the past eight sessions. During this period, the Sensex lost 3.24%, while the Nifty fell 3.08%. Investors’ wealth eroded by Rs 8.62 lakh crore over these eight sessions, including Rs 2.01 lakh crore on Wednesday alone. The total market capitalisation of BSE-listed companies stood at Rs 484.20 lakh crore. The broader indices, however, outperformed the benchmarks, with the BSE Midcap falling 2.06%, while the BSE Smallcap gained a modest 0.34%.
All sectoral indices declined over the eight-session period. The IT sector led the losers with a 7.6% fall, followed by auto, realty, consumer durables and financial services.
Around 2,400 stocks, or 60%, out of 4,100 actively traded stocks declined over the eight sessions. Barring three, all Sensex constituents declined, while 42 of the 50 Nifty stocks fell during the period.
Infosys was the top loser among Sensex stocks, declining 9.5% over the eight sessions. Tech Mahindra, HCLTech, UltraTech Cement and TCS were the other major Sensex laggards during the period.