Sensex crashes 1,600 points in 2 days: What's hurting markets?
What's the story
The Indian stock market has been on a downward spiral for the past two sessions, with the Sensex and Nifty 50 crashing by nearly 1,600 points or almost 2%. The mid and small-cap segments have also seen a decline. The Nifty Midcap 100 and Smallcap 100 indices fell by up to half a percent during Thursday's session after closing higher on Wednesday. At the time of writing, Sensex was trading at 77,664, down by over 850 points.
Sectoral impact
Banking and auto stocks drag indices
The sell-off in banking stocks, which hold a significant weight in benchmarks, is one of the main reasons behind the decline. The Nifty Bank, Private Bank, PSU Bank, and Financial Services indices fell over 1% during the session. HDFC Bank, ICICI Bank Bajaj Finance and Kotak Mahindra Bank were among those dragging down headline indices. The auto sector also witnessed heavy losses with Nifty Auto index declining over 2% during today's session.
Oil impact
Spike in crude oil prices major factor behind sell-off
Brent Crude prices have risen over 1% to trade levels beyond $103 a barrel amid renewed tensions between the US and Iran. The spike in crude oil prices is said to be a major factor behind the selloff. "Prices have again inched above the $100 mark and are sustaining, keeping market sentiment weak," Ajit Mishra, SVP of Research at Religare Broking, said.
Geopolitical influence
US-Iran conflict intensifies, keeps investors on edge
Market participants are reacting to lingering uncertainties about the fate of the US-Iran conflict. Even though US President Donald Trump has extended the ceasefire with Iran indefinitely, some reports suggest that America isn't willing to extend it beyond a few days. The timeline for talks remains unclear as well, with neither side showing up for scheduled discussions in Pakistan.
Investor behavior
FIIs turn net sellers after brief buying spree
After a brief buying spree in Indian equities, foreign institutional investors (FIIs) have resumed selling stocks in the cash segment. Over the last three sessions, they have sold Indian stocks worth over ₹5,000 crore. Most of these sales are in large-caps while some experts say FIIs are buying mid and small-cap stocks which is supporting broader markets.