Sensex plunges 900 points, ends 5-day winning streak
What's the story
The Indian stock market witnessed a major downturn today, with the BSE Sensex plummeting by over 900 points and the Nifty 50 index falling below the crucial level of 23,800. The fall comes after a five-day winning streak for both indices. The decline can be attributed to several factors, including geopolitical tensions in West Asia and rising crude oil prices.
Market influencers
Geopolitical tensions and rising crude oil prices weigh on markets
The US-Iran ceasefire's fragility and fears of Iran withdrawing from talks if Israel continues its offensive on Lebanon have heightened geopolitical tensions. This has made investors wary of the Strait of Hormuz, a vital trade route for global oil supplies. Additionally, Brent crude oil prices surged 2% to $96.73 per barrel, further adding to India's economic woes by potentially widening the fiscal deficit and pushing up inflation.
Investor actions
FIIs continue selling spree, Indian rupee depreciates
Foreign Institutional Investors (FIIs) continued their selling spree, offloading equities worth ₹2,811.97 crore on Wednesday. Such sustained outflows usually weigh on domestic markets as they reduce liquidity and indicate a cautious global investor sentiment. Meanwhile, the Indian rupee depreciated against the US dollar amid fears of a fragile ceasefire and Iran's threat to withdraw from talks if Israel continues its offensive in Lebanon.
Market volatility
India VIX rises over 3%
The India VIX, a measure of market volatility, rose over 3% to a level indicating increased uncertainty and risk perception among investors. Thursday also marks the Sensex derivatives expiry date, which usually leads to higher volatility due to position unwinding or rollover. Profit booking was also observed after five consecutive sessions of gains in the domestic market.