Indian markets experienced their steepest single-day fall since March 30, with the Nifty 50 declining 1.49% and Sensex falling 1.7% on Monday. According to reports from Mint, the selloff was triggered by Prime Minister Narendra Modi's appeal to Indians to cut fuel consumption, avoid buying gold for a year, and limit foreign travel. Investors interpreted these remarks as a signal that the government may be preparing for tougher measures, including possible fuel price hikes or steps to curb imports.
The Prime Minister's remarks triggered a broad selloff across sectors vulnerable to potential curbs or price increases. As reported by Mint, Nifty 50's biggest losers included jewellery maker Titan and airline operator IndiGo, which fell 6.85% and 5.73% respectively. Oil marketing companies Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. also declined sharply, with Reliance Industries Ltd (RIL) falling 3.48%. Other index heavyweights dragged the benchmarks lower, with Bharti Airtel's stock falling 3.79% and State Bank of India declining 4.36%.
According to Prashant Vashisht, senior vice president at Icra Ltd, Indian OMCs are already incurring substantial losses on auto fuel sales. As reported by Mint, at crude prices of $120-125 per barrel, OMCs are incurring losses of around ₹1,000 crore per day on the sale of auto fuels and domestic LPG. Brent crude prices jumped 3% to touch $103 per barrel as of 3:30 pm on Monday, adding to the pressure on fuel companies.
Investors are worried about potential fuel price hikes worsening inflationary pressures. According to Rajesh Palviya, head of research at Axis Direct, as reported by Mint, the markets could see further knee-jerk reactions if the government announces fuel price hikes. Pranjul Bhandari from HSBC Ltd noted that the El Nino and temperature channel can add 0.5 percentage points to inflation over a year, with headline inflation expected to average 5.6% in FY27 compared to 2.06% in FY26.
The selloff was broad-based with the Nifty Midcap and Nifty Smallcap indices falling 1% and 1.06% respectively. As reported by Mint, except for defensive sectors like Nifty Pharma (0.25% rise) and Nifty FMCG (0.08% rise), all major sectoral indices closed in the red. The BSE market capitalization fell by ₹6.1 trillion to ₹467 trillion on Monday, indicating significant investor anxiety about potential government measures.
