MUMBAI: Global crude oil prices climbed to a six-month high on Trump administration’s refusal to extend sanction waivers to importers of Iranian oil, which includes India, affecting domestic equity and bond markets. Benchmark indices, which had climbed to an all-time high last week on strong foreign portfolio inflows and pre-election sentiments, got spooked by oil price outlook. Sensex and Nifty saw a sharp single-day correction, resuming from Thursday’s trade to close at 38,645 (-495) and 11,594 (-158) respectively, down by around 1.3 per cent.
BSE’s oil & gas index fell 3.2 per cent, and among the refiners, BPCL and HPCL lost close to 6 per cent, IOC 4 per cent and Reliance 3 per cent. “After a breathtaking rally of past two months, a correction was due in Indian markets; and crude oil has triggered it. Further, ongoing results season has provided mixed performance till date. For the markets to sustain at elevated levels, it is important for Indian corporate earnings to remain robust,” said Jagannadham Thunuguntla of Centrum Broking.
Reliance stock, despite a strong overall performance reported for the fourth quarter last Thursday, was pulled down by the weight of oil price news. HDFC Bank’s stable numbers reported on Saturday didn’t help the stock slipping into red on Monday. Bank stocks were in red as Jet Airways’ suspension has cast a shadow on the possible NPA situation.
“As markets halted its winning streak, the fear index rose to three-year high amidst the general elections and rising crude prices. The INDIA VIX climbed to above 24 levels, which indicates increasing concerns amongst market participants and is a sign of rising volatility,” said Ruchit Jain of Angel Broking. Nifty and Bank Nifty saw profit-booking in the last couple of sessions and a rise in volatility index could lead to some roller coaster rides in the short-term, he said.
Meanwhile, NSE on Monday said 34 securities would be excluded from the derivatives segment for not meeting enhanced eligibility criteria. It includes SIB, Karnataka Bank, Indian Bank, NHPC, IRB Infrastructure, Repco Home Finance, BEML and India Cements.