Dalal Street remained under pressure in early trade on Friday, with the Sensex falling over 500 points and the Nifty slipping below 23,700 as investors reacted to surging crude oil prices, weak global cues from Wall Street and disappointing June-quarter earnings from several companies.
Benchmark indices extended their losses in early trade, with the BSE Sensex plunging 902.48 points, or 1.18%, to 75,488.91, while the NSE Nifty50 dropped 256.15 points, or 1.07%, to 23,613.45 around 10:20 am, as rising crude oil prices and weak global cues continued to weigh heavily on investor sentiment.
Here are the three key reasons behind today’s selloff.
BRENT CRUDE SURGES ABOVE $100
The biggest trigger for today’s decline is the sharp rise in crude oil prices.
Brent crude climbed above the psychologically important $100-a-barrel mark to $100.64, while WTI crude traded near $92 after fresh attacks on Saudi oil tankers heightened fears of supply disruptions in the Middle East.
Higher crude prices are a major concern for India because they increase inflation, widen the trade deficit, weaken the rupee and hurt corporate profitability.
Dr. VK Vijayakumar of Geojit Investments said the spike in Brent crude has revived concerns around India’s balance of payments and is likely to keep markets volatile.
He also noted that the weakening rupee has prompted foreign investors to turn sellers again, while higher US bond yields remain another near-term headwind for equities.
WALL STREET SELLOFF SPILLS OVER TO DALAL STREET
Weak global cues also weighed on Indian equities after Wall Street witnessed sharp losses overnight.
The Dow Jones fell 1%, the S&P 500 lost 1.2% and the Nasdaq plunged 2.2% after disappointing earnings from Alphabet and Tesla.
Investors grew concerned that the two technology giants are spending aggressively on artificial intelligence infrastructure without generating enough cash flows.
Tesla shares plunged around 14%, while Alphabet fell about 7% after announcing another $15 billion increase in AI spending.
The selloff added to existing worries over semiconductor stocks and high valuations in technology companies, hurting risk appetite across global markets.
WEAK Q1 EARNINGS HIT SENTIMENT
June-quarter earnings also disappointed investors.
Infosys declined after reporting weaker-than-expected quarterly numbers, while IndiGo also came under pressure following its earnings announcement.
The weak results added to concerns that corporate earnings may not be strong enough to offset rising input costs and geopolitical risks.
SENSEX AND NIFTY TOP GAINERS
Selling pressure was visible across the broader market as well. The Nifty Smallcap 100 fell close to 1%, while the Nifty Midcap 100 and Nifty Midcap 50 also traded lower, indicating weakness beyond the benchmark indices. India VIX jumped nearly 7%, signalling heightened volatility and growing investor nervousness.
Sectorally, the selloff was led by realty, auto and metal stocks. Financial services, oil & gas, private banks and PSU banks also traded lower, reflecting broad-based weakness across the market. FMCG and IT, however, bucked the trend and were the only sectors trading marginally higher.
Among Sensex stocks, HCLTech emerged as the top gainer, followed by TCS, Sun Pharma, Tech Mahindra and Adani Ports. On the losing side, Bharti Airtel led the decline, followed by IndiGo, Eternal, Bajaj Finance, Larsen & Toubro and Tata Steel. Banking heavyweights HDFC Bank, ICICI Bank, Axis Bank and SBI also remained under pressure, adding to the drag on the benchmark.
