Sensex falls nearly 800 points: What's behind today's decline?
What's the story
India's benchmark indices, the Sensex and Nifty, witnessed a sharp decline on Thursday. The fall was mainly driven by rising crude oil prices, foreign fund outflows, and expectations of prolonged tighter monetary conditions both domestically and globally. At around 11:30am, the Sensex had plummeted by 772.30 points or 1.06% at 71,866.40, while the Nifty fell to 22,337.30, down 265.75 points or 1.18%.
Market response
IT, consumer durables sectors hold firm
The market's decline was also influenced by the Reserve Bank of India's (RBI) decision to raise its benchmark repo rate by 25 basis points to 5.5%.
This is the first hike in nearly four years, amid rising inflation and robust economic growth.
All major Nifty sectoral indices declined except for IT and consumer durables sectors.
The broader Nifty Smallcap 100 and Nifty Midcap 100 indices fell up to 1% each.
Market factors
Brent crude rises by over 2%
Brent crude, the global oil benchmark, rose by 2.02% to $102.2 per barrel amid concerns over West Asia supplies due to increased attacks on shipping in the Gulf and Strait of Hormuz.
Meanwhile, foreign institutional investors sold Indian equities worth over ₹6,100 crore on Wednesday, adding to the market's woes.
Expert opinion
Experts warn of prolonged risk-off sentiment
Hariselvan Radhakrishnan, founder & CEO of HST Wealth, a research analyst firm, said the "key overhang is no longer the RBI's rate increase alone but the growing prospect of tighter domestic and global monetary conditions persisting for longer."
He added that this could keep pressure on risk appetite and foreign flows.
Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, echoed similar sentiments about cautious outlook for Indian equities after RBI's repo rate hike.