NEW DELHI: Mainly driven by higher crude oil prices and rising global interest rates, both sensex and Nifty reversed gains on Thursday morning and witnessed a sharp decline. The information technology and consumer sectors were mainly at the forefront of the market decline.
The BSE benchmark sensex fell 610 points to close at 65,508, while Nifty fell 193 points to close at 19,524.
Here are the top reasons why Sensex and Nifty declined today:
Higher oil price
Oil continued its upward trajectory on Thursday, hitting a new one-year high and approaching the coveted $100 per barrel mark. This increase was caused by concerns about increasing demand for oil and decreasing supply. Meanwhile, expectations of another rate hike in the United States strengthened the dollar’s position, resulting in mixed performance for equities.
Uncertainty increased with news that troubled Chinese developer Evergrande had halted trading in its Hong Kong-listed shares. The development followed a cautious example from Wall Street, where investors remained tense amid speculation about further Federal Reserve policy tightening.
Crude oil prices posed a particular challenge for India, the world’s third-largest oil importer. The Indian economy is more sensitive to higher oil prices as the country relies heavily on crude oil imports to meet its energy needs.
Fear of inflation
Inflation concerns are expected to persist as oil prices remain high, potentially leading to the Reserve Bank of India (RBI) maintaining its ongoing interest rate pause for an extended period. This situation could dash hopes of lower Equated Monthly Installments (EMIs).
According to DK Joshi, the chief economist at Crisil, “If the ongoing and sustained rise in crude oil prices continues, it could impact overall consumer inflation directly through factors such as higher fuel costs and indirectly through higher production and transportation costs. “
High interest rates on US government bonds
Global equality markets are under pressure from rising US Treasury yields and a stronger dollar, fueled by concerns that interest rates will remain high for longer after the Federal Reserve took a more hawkish stance earlier this month.
Sales by FIIs
The foreign institutional investors (FIIs) were net sellers in September. They have been sold for Rs 21,640 crore so far in September.
Profit booking
VK Vijayakumar, chief investment strategist at Geojit Financial Services, emphasizes the need for caution among investors at this time. He recommends a cautious approach to booking profits on mid- and small-cap stocks, which have seen significant gains on optimism and aggressive buying. Vijayakumar suggests that seeking safety in large-cap stocks, especially in sectors like banking/financials, capital goods and autos, could be a wise strategy.
The BSE benchmark sensex fell 610 points to close at 65,508, while Nifty fell 193 points to close at 19,524.
Here are the top reasons why Sensex and Nifty declined today:
Higher oil price
Oil continued its upward trajectory on Thursday, hitting a new one-year high and approaching the coveted $100 per barrel mark. This increase was caused by concerns about increasing demand for oil and decreasing supply. Meanwhile, expectations of another rate hike in the United States strengthened the dollar’s position, resulting in mixed performance for equities.
Uncertainty increased with news that troubled Chinese developer Evergrande had halted trading in its Hong Kong-listed shares. The development followed a cautious example from Wall Street, where investors remained tense amid speculation about further Federal Reserve policy tightening.
Crude oil prices posed a particular challenge for India, the world’s third-largest oil importer. The Indian economy is more sensitive to higher oil prices as the country relies heavily on crude oil imports to meet its energy needs.
Fear of inflation
Inflation concerns are expected to persist as oil prices remain high, potentially leading to the Reserve Bank of India (RBI) maintaining its ongoing interest rate pause for an extended period. This situation could dash hopes of lower Equated Monthly Installments (EMIs).
According to DK Joshi, the chief economist at Crisil, “If the ongoing and sustained rise in crude oil prices continues, it could impact overall consumer inflation directly through factors such as higher fuel costs and indirectly through higher production and transportation costs. “
High interest rates on US government bonds
Global equality markets are under pressure from rising US Treasury yields and a stronger dollar, fueled by concerns that interest rates will remain high for longer after the Federal Reserve took a more hawkish stance earlier this month.
Sales by FIIs
The foreign institutional investors (FIIs) were net sellers in September. They have been sold for Rs 21,640 crore so far in September.
Profit booking
VK Vijayakumar, chief investment strategist at Geojit Financial Services, emphasizes the need for caution among investors at this time. He recommends a cautious approach to booking profits on mid- and small-cap stocks, which have seen significant gains on optimism and aggressive buying. Vijayakumar suggests that seeking safety in large-cap stocks, especially in sectors like banking/financials, capital goods and autos, could be a wise strategy.
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