Mumbai, Sep 28: Indian equities ended Monday’s session with a sharp decline as a combination of higher crude oil prices, geopolitical uncertainty, rising global bond yields and continued foreign portfolio selling triggered broad-based risk aversion.
The Sensex dropped 1,124.02 points, or 1.52 per cent, to close at 72,771.72, while the Nifty 50 declined 360.25 points, or 1.56 per cent, to settle at 22,780.25.
Selling was visible across market segments, with the Nifty MidCap 100 falling 1.63 per cent and the Nifty SmallCap 100 declining 1.85 per cent.
Oil prices emerge as a major concern
Rising crude prices were among the key factors weighing on investor sentiment. Brent crude futures climbed 2.2 per cent to around $106.6 per barrel, while US WTI crude also moved higher.
The increase in oil prices has raised concerns for India because of its dependence on imported crude. Sustained high energy prices can increase the country’s import bill and put pressure on inflation, transportation expenses and corporate input costs.
The market is also monitoring developments in West Asia amid concerns that prolonged tensions could affect global energy supplies and keep crude prices elevated.
Global uncertainty triggers risk-off mood
The geopolitical situation added to caution across financial markets. Uncertainty surrounding the US-Iran conflict and developments involving the Strait of Hormuz increased concerns over the stability of global energy flows.
The risk-off mood was visible across Asian markets, with several major regional indices ending lower as investors reassessed exposure to riskier assets.
For Indian equities, the combination of geopolitical uncertainty and expensive crude created additional pressure on sectors and companies sensitive to energy costs and global financial conditions.
Rising bond yields add another pressure point
Global bond markets also remained under pressure, with US Treasury yields moving higher as investors reassessed inflation risks.
The yield on the US two-year Treasury note rose five basis points to 4.90 per cent, while the benchmark 10-year yield increased four basis points to 5.20 per cent.
Higher yields in developed markets can influence global capital allocation by making fixed-income assets more attractive and tightening financial conditions for emerging markets.
Foreign selling remains a drag
Foreign portfolio investors continued to put pressure on Indian equities. According to NSDL data, FPIs have sold around Rs 17,131 crore worth of Indian equities so far in September, taking their net selling for the year to around Rs 2.41 lakh crore.
The reversal in foreign flows has become an important factor for domestic markets after overseas investors had remained net buyers during July and August.
Broad-based selling reflects investor caution
The market decline extended across large, mid and small-cap stocks, indicating a wider shift towards risk reduction.
Among Nifty constituents, Tata Motors Passenger Vehicles, Power Grid and Jio Financial Services were among the major laggards.
The sharp fall in the broader indices also suggests that the pressure was not confined to a handful of heavyweight stocks.
Crude and global cues remain key for markets
The latest correction has put the spotlight on the combination of crude prices, global yields, geopolitical developments and foreign fund flows.
Investors are likely to closely track the movement of Brent crude, developments around the Strait of Hormuz, US Treasury yields, the rupee and FPI activity in the coming sessions.
For the domestic economy and markets, the duration of the oil-price shock will remain important. A sustained rise in crude could have wider implications for inflation, corporate costs, household purchasing power and investor sentiment.