Indian benchmark indices reversed early gains sharply through midday on Monday, with Sensex plunging 548 points to settle at 71,924.68, declining 0.76%, while Nifty 50 fell 157.1 points to 22,363.35, down 0.7%. The Sensex crashed more than 1,200 points from its intraday high of 72,884.25, representing a significant deterioration from earlier session highs. India VIX spiked more than 7% to 15.44, indicating rising investor anxiety as market breadth remained heavily negative. The Nifty's Advance-Decline ratio stood at a lopsided 8:42, with 3,176 stocks declining against just 986 advancing, while 235 stocks hit fresh 52-week lows compared to 113 touching 52-week highs. On the NIFTY50 index, 36 stocks closed in red while 13 advanced by the end of the session. Despite a sharp rebound in the Indian rupee, which appreciated 1% to 95.78 against the US dollar, investor sentiment in the equity market remained subdued.
Global crude oil prices jumped above $106 per barrel on Monday, as energy prices retracted from their previous evening highs of $103.55 per bbl. Brent crude prices rose 0.79% to $105.5 per barrel amid rising tensions in West Asia, with attacks on shipping in the Gulf and the Strait of Hormuz adding to concerns over global supplies. WTI crude jumped 0.73% to $92.52, continuing the elevated price trend that has weighed heavily on Indian markets. Bond yields witnessed further selling pressure after the RBI's move, with India's benchmark 10-year bond yield surging to 7.3580%. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that "the market is going through a stage wherein external headwinds are dominating domestic tailwinds. Elevated crude prices and high US bond yields will continue to impact the market."
The banking stocks declined on Monday, dragging down the sectoral benchmark index as investors focused on the latest updates from the central bank, which seeks to tighten liquidity in the system. Latest updates showed that over the weekend, the Reserve Bank of India (RBI) announced a series of moves to curb liquidity in the Indian banking system amid elevated inflation concerns in the economy. The Reserve Bank of India's latest policy decision has significantly changed market sentiment, with the central bank raising the repo rate by 25 basis points, marking its first rate hike in nearly four years. More importantly, the Monetary Policy Committee shifted its stance from 'neutral' to 'calibrated tightening', signaling that rates could remain higher for longer. The announced ₹25,000 crore open market bond sale will absorb surplus liquidity, while the higher daily CRR maintenance requirement will tighten banks' liquidity management.
Sectoral performance remained mixed, with IT, FMCG and banking stocks among the major laggards, while realty and auto stocks displayed relative resilience and ended in positive territory. Among individual stocks, ITC, Tech Mahindra, HUL, L&T and SBI were the top Sensex losers, while BEL, M&M, Kotak Mahindra Bank, HCL Technologies and Bajaj Finance were the top gainers. Market breadth was marginally positive, with 2,292 stocks advancing against 2,163 declining on the BSE. The Nifty Smallcap 100 gained 1.42%, while the Nifty Midcap 100 ended nearly flat, up 0.08%. Investors' wealth rose marginally by ₹13,518 crore to ₹465.45 lakh crore. The broader market also witnessed mixed trends, with across Asia, South Korea and Indonesia were the top losers, declining 3.65% and 2.59% respectively, while the Philippines and Malaysia were the top gainers, rising 0.74% and 0.59% respectively.
Foreign Portfolio Investors (FPIs) continued their selling spree in October, with equity sales of ₹44,166 crores so far, bringing total outflows this year to more than ₹3 lakh crore. The market investors remained concerned as FPIs pulled out ₹44,166 crore from Indian equities so far in October, adding to the ₹45,125 crore sold in the first nine days. Ankur Punj, Managing Director, Equirus Wealth, noted that "Markets continued to feel the jitters from the raging conflict in the Middle East, which prompted investors to further reduce their equity exposure." He added that despite the rupee's sharp recovery against the dollar, a bearish sentiment persisted in the equity market amid weak cues from Asian markets and sustained foreign fund outflows from domestic equities. Ajit Mishra, SVP – Research, Religare Broking, noted that "Elevated global bond yields, escalating geopolitical tensions and persistent foreign fund outflows continued to act as major headwinds." He added that the tendency for markets to face selling pressure on every rebound highlights the fragile nature of the recent recovery and the lack of sustained buying conviction at higher levels.
