Indian equity markets witnessed sharp selling in morning trade on Friday, with benchmark indices tumbling nearly 1 per cent amid rising geopolitical tensions, soaring crude oil prices and renewed concerns over global trade.
The BSE Sensex plunged more than 800 points, or around 1 per cent, to an intraday low of 75,575, while the NSE Nifty 50 fell over 200 points to 23,631, slipping below the 23,700 mark during the session. The weakness was broad-based as the Nifty Midcap 100 and Nifty Smallcap 100 indices also declined nearly 1 per cent.
The sharp decline wiped out nearly Rs 5 lakh crore in investor wealth, with the market capitalisation of BSE-listed companies falling to about Rs 472 lakh crore from nearly Rs 477 lakh crore in the previous session.
Global Triggers Drive Selloff
The biggest trigger for the selloff remained the sharp surge in crude oil prices. Brent crude for September delivery climbed above USD 100 per barrel, extending gains for a sixth consecutive session. The benchmark has gained around 15 per cent this week after rising 16 per cent last week and is up nearly 40 per cent so far in July.
Higher crude prices have revived concerns over India's import bill, inflation trajectory and corporate earnings. Investor sentiment also remained fragile amid the continuing US-Iran conflict, with reports suggesting US President Donald Trump is considering a fresh major military operation against Iran while the US military completed its 13th consecutive night of strikes on Iranian targets.
Adding to the pressure, the benchmark US 10-year Treasury yield has climbed around 6.5 per cent this month to 4.711 per cent, increasing the risk of foreign capital outflows from emerging markets such as India as investors shift towards higher-yielding US debt.
Markets were also unsettled by fresh tariff measures announced by the US administration. Over the past two weeks, the US imposed tariffs of 25 per cent on Brazil, 50 per cent on Canada and up to 200 per cent on generic drugs. On Thursday, it also announced tariff rates of 10 per cent to 12.5 per cent on nearly 60 trading partners under Section 301, with India placed in the lower 10 per cent category.
The latest tariff announcements reinforced concerns that trade protectionism could slow global economic growth, stoke inflation in the US and keep interest rates higher for longer, further dampening investor sentiment.
Technical Outlook Remains Weak
Market participants also remained cautious due to deteriorating technical indicators. According to Bajaj Broking Research, Gift Nifty signalled a gap-down opening amid weak global cues and rising crude oil prices, while the Nifty was expected to trade in the 23,550-24,000 range.
The brokerage said the Nifty has extended its decline for the fourth consecutive session after closing below the 23,900 level and maintaining a pattern of lower highs and lower lows, indicating continuation of the corrective trend. A breach below the key 23,800 support level could accelerate the decline towards 23,500, where multiple technical support indicators converge.
Bajaj Broking further noted that Nifty Futures open interest has risen consistently over the past three trading sessions, indicating fresh short additions. It added that unless crude oil prices cool meaningfully, pressure on Indian equities is likely to persist during the remaining July expiry sessions. |
