Why Sensex is down 1,000 points today
What's the story
The Indian stock market is witnessing a major downturn today, with the benchmark indices Sensex and Nifty facing severe selling pressure for the second consecutive session. At around 9:20am, Sensex was down by 996.80 points or 1.35% to trade at 72,586.42 while Nifty fell by 294.70 points or nearly 1.3% to trade at around 22,524.90 levels.
Oil surge
Crude spike blamed for market crash
The recent spike in crude oil prices is one of the major reasons behind today's market crash. Brent crude has jumped 3% to $115.98 per barrel, taking its monthly gain to a whopping 60%. This is higher than the rise seen after Iraq's invasion of Kuwait in 1990. US crude has also risen by 3% to $102.52, marking a monthly increase of 53%.
War impact
Houthis attack Israel raises shipping fears
The US-Israeli war on Iran has entered its fifth week and is spreading across the Middle East. Yemen's Iran-aligned Houthis attacked Israel over the weekend, raising fears of disruptions to shipping lanes around the Arabian Peninsula and Red Sea. These developments have further sapped risk appetite among investors, contributing to today's market downturn.
Bank slump
RBI directs $100 million forex cap
The Reserve Bank of India (RBI) has tightened limits on lenders' net open forex positions to curb volatility in the weakening rupee. The move has led to a slump in bank shares, with Bank Nifty falling over 2%. The RBI has directed banks to cap their net open rupee positions in the foreign exchange market at $100 million by end of each business day, effective April 10.
FPI selling
Foreign investors sell ₹4,367cr on Friday
Foreign investors have continued their selling spree of Indian shares, offloading ₹4,367 crore worth on Friday alone. "FPIs were net sellers on all trading days in March, so far," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd. He attributed the sustained selling by FPIs to weakness in global equity markets due to the West Asia war and fears of high crude prices impacting India's growth and corporate earnings.