Sensex plunges over 800 points: What's behind the fall?
What's the story
The Bombay Stock Exchange's Sensex and National Stock Exchange's Nifty indices witnessed a sharp fall in early trade today. The Sensex plunged by over 800 points, or 1.04%, to trade at 76,853 while the Nifty fell by some 230 points, or nearly 1%, to trade at 23,943. The fall was largely due to rising crude oil prices and continued foreign selling pressure amid geopolitical uncertainties in West Asia.
Oil impact
Surge in crude oil prices weighs on market
Brent crude is currently trading at around $106 per barrel amid rising tensions in West Asia and fears of disruptions in the Strait of Hormuz. Analysts say that fluctuations in crude prices, driven by uncertainty around US-Iran negotiations, continue to dictate near-term market direction. This has been a major factor contributing to the recent fall in Sensex and Nifty indices.
FII activity
Continued foreign selling adds to bearish sentiment
Foreign institutional investors (FIIs) continued their selling spree for the fourth consecutive session on Thursday, offloading equities worth over ₹3,200 crore. VK Vijayakumar of Geojit Investments said that renewed foreign selling, coupled with a spike in crude prices and weakness in the rupee, could continue to weigh on large-cap stocks. This further added to the bearish sentiment in today's market.
IT sector
IT stocks remain under pressure
Subdued guidance from major IT companies has also been weighing on market sentiment. Stocks such as Infosys, HCL Tech, TCS, and Tech Mahindra remained among the top laggards, falling up to 5%. The Nifty IT index fell nearly 3.8%, making it the worst-performing sector in today's trade. This weakness in the IT sector further contributed to today's market downturn.
Global influence
Crude prices continue to weigh on investor sentiment
The US markets closed lower overnight amid geopolitical tensions and mixed earnings. However, sentiment improved slightly after market hours following the extension of the Israel-Lebanon ceasefire. Elevated oil prices and uncertainty around negotiations continued to keep risk appetite in check. The India VIX rose over 3.5% to around 19.2, reflecting cautious positioning among investors amid these global developments.