NEW DELHI: Domestic equity market fell sharply on Thursday with benchmark indices -- BSE Sensex and NSE Nifty50 -- crashing nearly 1% on weak global cues amid a sharp jump in crude oil prices and selling pressure across the IT pack. Brent Crude prices have now surged over $97 a barrel, the most in over 10 months over tight global supply.
The market was also volatile on the last session of the monthly F&O expiry. Investors are watchful of inflationary pressures and fears of another interest rate hike. Meanwhile, foreign institutional investors (FII) continue to pull out from the Indian market as US bond yields have climbed to a 10-year high. FII net sales stood at over Rs 3300 crore on Thursday.
“World stocks were on track for their longest losing streak in two years on Thursday as the sight of oil prices heading for $100 a barrel compounded concerns about persistently high global interest rates while persistent fears of higher U.S. interest rates and concerns over China’s beleaguered property market also dented sentiments,” said Deepak Jasani, Head of Retail Research, HDFC Securities. Vinod Nair, head of Research at Geojit Financial Services, said if crude continues to stay above the $90 level, it will be a threat to inflation and boil the operational margins. India is the world’s third-largest importer of crude oil and a continuous rise in global prices is triggering inflation risks.
“Globally, US GDP data and the FED chief speech will be watched carefully, which will set the future trend. Currently, the combination of higher interest rates and US bond yields are influencing FIIs to stay in the selling mode,” added Nair.
The Sensex crashed 610 points, or 0.92% to close at 65,508 levels, while the Nifty settled at 19,524, down 193 points or 0.98%. The market capitalisation of BSE-listed firms fell by Rs 2,95,144.09 crore to Rs 3,16,65,937.80 crore. Broader indices were under selling pressure on Thursday with the SBE Midcap falling 1.19% and the BSE Smallcap shedding 0.34% points.