Stock markets continued to fall for the third straight session on Monday, with the benchmark Sensex falling 1,313 points as rising crude oil prices weighed on investor sentiment following the failure of peace talks between the US and Iran over the ongoing conflict in West Asia.
The 30-share BSE Sensex fell 1,312.91 points or 1.70 per cent to 76,015.28. The index fell 1,370.79 points or 1.77 percent to 75,957.40 during intraday trading.
Analysts also pointed to Prime Minister Narendra Modi’s call for austerity measures, which added to concerns over foreign exchange reserves, rising fuel prices and the broader consumption outlook.
Investors’ property worth Rs 6.4 lakh crore was destroyed
It was a particularly brutal session for Indian benchmark indices Sensex and Nifty, which posted their sharpest one-day declines since March 30. According to the report, NSE Nifty 50 fell 1.49 per cent to close at 23,815.85, while BSE Sensex fell 1.70 per cent to 76,015.28.
Sharp selloff almost wiped out ₹Investor wealth increased by Rs 6.4 lakh crore on Monday as the total market capitalization of NSE-listed companies declined.
Read this also Sensex falls a day after Trump rejects Iran peace proposal, PM appeals for WFH
Top 5 reasons for fall in Sensex
1. Increasing geopolitical tension in West Asia
Investor sentiment remained under pressure after US President Donald Trump dismissed Iran’s response to the latest peace proposal as “completely unacceptable”. The comments dashed hopes for an immediate diplomatic breakthrough and fueled fears of further tensions in the region.
2. Crude oil prices increased rapidly
The sharp rise in crude oil prices became the biggest trigger for the selloff. Brent crude jumped nearly 4 percent to around US$105.7 a barrel, adding to concerns over inflation, fuel costs and India’s external balance, according to Siddharth Khemka, head of research at Motilal Oswal Financial Services.
3. Market worried by PM Modi’s appeal for austerity
Analysts said Prime Minister Narendra Modi’s comments on conservation of foreign exchange have increased market concerns. Addressing a rally in Hyderabad on Sunday, Modi urged citizens to reduce fuel consumption, postpone gold purchases and avoid non-essential foreign travel for a year amid the ongoing crisis in West Asia.
He also encouraged the use of metro rail services, carpooling, electric vehicles, railway parcel services and work-from-home arrangements to reduce fuel dependence.
Research analyst and founder of Livelong Wealth Hariprasad K said the market interpreted the speech as a sign of rising macroeconomic stress.
“While global uncertainty over the US-Iran conflict and rising crude prices had already dampened sentiment, the Prime Minister’s appeal for austerity measures has heightened investor concerns about India’s foreign exchange reserves, fuel costs and consumption outlook,” he said.
4. Heavy selling in jewelery and consumer stocks
Jewelery stocks came under heavy selling pressure after the Prime Minister’s comment on postponing the purchase of gold. Sky Gold and Senco Gold fell more than 12 percent in intraday trade before recovering slightly. Senco Gold ultimately closed 7.8 percent lower.
Consumer durables and discretionary stocks also witnessed a sharp decline amid fears of weak demand.
5. Foreign investors continue to sell equities
Foreign institutional investors (FIIs) continued their selling spree and sold equities ₹4,110.60 crore on Friday, according to exchange data. Continued foreign withdrawals further increased pressure on domestic markets.
Sector-wise, BSE consumer durables index fell 3.76 per cent, realty fell 2.74 per cent, PSU banks fell 2.28 per cent, while power and consumer discretionary indices also closed sharply lower. However, healthcare and hospital stocks managed to remain resilient.
Broader markets also remained under pressure, with the BSE Midcap Select index falling 1.09 per cent and the Smallcap Select index falling 0.44 per cent. Overall the market breadth was weak, with 2,892 shares declining compared to 1,457 shares on the BSE.
“The benchmark index slipped below 24,000 points as renewed tensions in the Gulf and fears over rising crude oil prices weighed on investor sentiment,” said Vinod Nair, head of research at Geojit Investments Ltd.