The Indian stock markets experienced a severe selloff with SENSEX plunging nearly 1,433 points from its day's high to close at 74,004 and NIFTY50 tumbling over 474 points from its day's high to end the session at 23,119. According to The Economic Times, the reversal marks a nearly 2% intraday drop for the benchmark indices, with the decline driven by broad-based selling pressure across the market. The sharp fall represents one of the most significant single-day declines in recent trading sessions, highlighting the intensity of the current market downturn. NIFTY50 ended Friday's session with a 2% loss at 22,819 points, whereas BSE Sensex ended the session 1690 points lower at 73,583 points, marking the fifth consecutive week of losses for Indian stock markets. However, as per Goodreturns, the benchmark indices recovered slightly from their opening lows, with Sensex trading 573 points lower at 74,328.69 and Nifty 50 at 23,274.80 as of around 10:30 AM. The latest session showed Sensex rallying more than 400 points and opening above 75,200, while NSE Nifty50 jumped over 100 points to cross 23,500 during early morning trading before the sharp reversal.
The primary catalyst for the market decline was crude oil prices surging to multi-month highs, as reported by The Economic Times. Brent crude extended its rally towards $109 per barrel as fighting between Iran-backed Houthi militants and Saudi-backed forces intensified in Yemen, adding another threat to Middle East oil flows already disrupted by the wider US-Iran conflict. Brent crude traded 1.30% higher at $107 per barrel in the latest session, while US West Texas Intermediate (WTI) crossed $100 a barrel, touching the highest closing levels since May 19. The global benchmark has surged nearly 30% from its early-August lows and is on course for its strongest weekly gain since July. The latest developments show WTI is now up 52.9% since the war began at the end of February and up 78.5% year-to-date. The surge in crude prices intensifies concerns that a prolonged conflict could keep global inflation elevated and raise concerns over shipping through key Middle Eastern and Red Sea routes.
The broader market was hit harder than the benchmark indices, with Nifty MidCap 100 down 1.42% and Nifty SmallCap down 1.40%, according to Goodreturns. Nifty Realty was the top loser, tumbling over 3%, while Hindalco Industries, Tata Steel, and Bajaj Finance were among the top losers. India VIX, which measures market volatility, jumped more than 6% to cross 12.5, indicating heightened market uncertainty and investor anxiety. The Indian rupee followed the weak market sentiment, opening 24 paise lower at 95.69 against the US dollar, compared to Thursday's close of 95.45. The weakness on Wall Street and the surge in crude oil have hit Asian markets hard, with Japan's Nikkei 225 falling around 1,820 points, or 2.79%, to trade near 63,450, and South Korea's Kospi dropping 177.25 points, or 2.52%. Worries of high inflation stoked fears of interest rate hike by the US Federal Reserve at the upcoming policy meet, denting investors risk-appetite.
Adding to market headwinds, US bond yields are rising significantly, with the US 10-year Treasury yield climbing close to 5%, its highest level in nearly three years, after US producer-price data added to concerns that inflation may remain sticky. The US Dollar Index (DXY) was up 0.07% to 99.14, while the United States 10-year bond yield rose 0.69% to 4.978%. Vijayakumar emphasized that an "equally strong headwind is the rise in US bond yields", noting that as it approaches the 5% mark, many regard this as a possible inflection point for global equities. Wall Street closed lower for the fourth consecutive session on Thursday, September 10, as oil prices topped $100 a barrel, with the Dow Jones Industrial Average falling 316.56 points, or 0.6%, to end at 52,064.10. The elevated oil prices are making investors expect higher inflation in the US, delaying the rate-cut cycle from the US Federal Reserve, adding to the risk-off mood in global markets. The Federal Reserve is expected to raise interest rates, with traders pricing in a 93% chance of a hike on Wednesday.
Market breadth remained deeply negative with 2,824 stocks declining against 754 advancing stocks out of 3,687 stocks that traded on NSE on September 15, as per The Economic Times. Nifty breached its last week low of 23,231, highlighting continuation of the downward bias. Pabitro Mukherjee from Bajaj Broking noted that Nifty formed a sizable bearish candle with a higher high and lower low, opening higher but failing to sustain at higher levels and giving up its entire gains to close deep in the red. He emphasized that going ahead, bias remains down below 23,600 levels being the Monday's high and last week breakdown area, with a follow-through weakness opening downside towards 23,000 and 22,800 levels in the coming sessions. Only a formation of higher high and higher low on a sustained basis in the daily chart and a move above 23,600 will signal a pause in the current down trend. IT stocks outperformed as comments suggesting slower AI development eased concerns over the rapid disruption of traditional IT services, while mid- and small-cap stocks lagged benchmark indices. According to analysts, the Indian stock market is now in the sixth week of correction, with the Nifty 50 benchmark approaching its next critical support zone of 23,000-23,100. A decisive break below this band could accelerate the current decline towards the 22,400-22,500 range, while 23,400-23,600 is likely to act as the key resistance zone.
