MUMBAI: India’s equity markets declined on Thursday, with the BSE Sensex and NSE Nifty falling sharply in intraday trade due to continued selling by foreign institutional investors and rising crude oil prices.
The Sensex fell about 1,237 points and the Nifty dropped around 380 points during the session. Both indices recovered from the day’s low, with the Sensex closing down 582.86 points or 0.75 per cent at 76,913.50, and the Nifty declining 180.10 points or 0.74 per cent to settle at 23,997.55.
The fall comes after a recent rally between April 1 and April 21, when both indices had gained around 10 per cent amid easing tensions in West Asia and lower crude prices. In the last eight sessions, however, both benchmarks have declined about 3 per cent.
Global oil prices surged, with Brent crude crossing $126 per barrel for the first time in four years, raising inflation concerns.
In the latest development in the US-Iran conflict, US President Donald Trump said Washington’s blockade of Iranian ports had been successful and urged Iran to “just give up”, while tensions continued over control of the Strait of Hormuz.
"Global sentiment deteriorated sharply as US–Iran tensions escalated and major maritime shipping routes faced continued disruption. Brent crude crossed the $120 per barrel mark for the first time in four years, intensifying inflation concerns and pressuring global risk assets. In India, rising oil prices weighed on the INR and revived worries about capital outflows and widening deficits, given the economy’s heavy reliance on crude imports,” said Vinod Nair.
Rising crude prices are expected to increase inflation and put pressure on the rupee and corporate margins. The rupee weakened to around 95.20, its lowest level, as higher oil prices increased India’s import bill.
Nair added that the US Federal Reserve’s decision to keep interest rates unchanged supported the dollar and tightened financial conditions for emerging markets. He said a mild recovery late in the session offered limited relief and overall sentiment remained cautious ahead of the extended holiday weekend.
Foreign institutional investors sold shares worth Rs 7,411 crore on Thursday, taking total outflows for the week to over Rs 13,000 crore.
The Indian stock markets will remain closed on Friday, May 1, for Maharashtra Day.
Sudeep Shah said the Nifty briefly slipped below its 20-day EMA during the session but recovered to close above it.
He said the index has been consolidating within a range of 538 points over the past six sessions, with 24,300 acting as resistance and 23,800 as support, and a breakout on either side may determine the next trend.
On the sectoral front, Nifty Metal, PSU Banks, Realty and FMCG stocks declined. The broader market also saw profit booking, with the Nifty Midcap index falling 0.98 per cent and the Nifty Smallcap index declining 0.48 per cent.