Sensex drops 600 points from day's high
What's the story
The Indian stock market witnessed a decline on Friday, with the benchmark indices Sensex and Nifty erasing their early gains. The Sensex had surged by 471.64 points or 0.62% to hit an intraday high of 75,870.36 in early trade. However, by around 3:00pm both indices reversed course amid profit booking at higher levels and rising crude oil prices. At the time of writing, Sensex was down 119 points to 75,279.
Market reversal
Broader market indices also witness decline
The decline was led by sectors such as metal, realty, PSU banks and oil & gas which fell up to 1.5%. The broader market also witnessed a decline with indices like Nifty Smallcap 100 and Nifty Midcap 100 falling by 0.23% and 0.25%, respectively.
Market influences
Profit booking after 2-day rally in equities
The market correction was mainly due to profit booking after a two-day rally in equities. On Thursday, the Sensex had surged by 789.74 points to settle at 75,398.72 while NSE Nifty advanced by 277 points to close at 23,689.60. Despite a ₹3 per liter hike in petrol and diesel prices across India, shares of oil marketing companies remained under pressure amid rising global crude oil prices and investor caution over the hike being lower than expected.
External factors
Asian markets also traded lower on Friday
Brent crude, the global oil benchmark, rose over 3% to $109.09 per barrel. Higher crude oil prices are a concern for India's economy as it imports a large portion of its crude requirements. Asian markets also traded lower on Friday amid concerns over the global economic outlook and geopolitical tensions. South Korea's Kospi, Japan's Nikkei 225 and Hong Kong's Hang Seng were all in negative territory while Wall Street futures indicated a weak opening for US markets.
Currency impact
Indian rupee opened weak against US dollar
The Indian rupee opened weak and fell by 30 paise to 95.94 against the US dollar after hitting fresh lows in the last three sessions. Forex traders attributed this decline to rising crude oil prices, a strong dollar, and concerns related to the West Asia crisis. Geopolitical tensions also weighed on markets with reports of a ship being reportedly seized by Iranian personnel off the United Arab Emirates on Thursday.