The Indian stock market benchmarks suffered strong losses in morning trade on Friday, 11 September, mirroring a weak global trend. The Sensex crashed over 700 points, or 1%, to drop to 74200, while the NSE barometer Nifty 50 plunged over 200 points, or 1%, to hit an intraday low of 23,231.
The selloff was broad-based as the BSE 150 Midcap and 250 Smallcap indices plunged up to 1.20%.
Investors lost about ₹6 lakh crore within the first five minutes of trade as the overall market capitalisation of BSE-listed firms dropped to nearly ₹478 lakh crore from nearly ₹484 lakh crore in the previous session.
Global market selloff
US stocks fell overnight as an increase in key inflation data heightened market concerns. Moreover, rising tensions between the US and Iran also weighed on sentiment.
The Dow Jones Industrial Average and S&P 500 declined 0.6% each, while the Nasdaq Composite fell 0.65%. MSCI’s gauge of global stocks dropped 0.66%.
Asian markets suffered deeper losses amid rising global bond yields, driven by heightened concerns over an inflation flare-up and monetary tightening.
Japan’s Nikkei, Korea’s Kospi, and Taiwan’s Taiwan Weighted crashed up to 3%
Why is the Indian stock market down today?
Experts find three key factors behind the crash in the Indian stock market:
1. Crude oil above $108 per barrel
Crude oil benchmark Brent crude reclaimed the $108 per barrel mark after fighting between Yemen-based Houthi militants and Saudi-backed forces intensified, raising concerns over deeper supply disruptions from the region.
“Headwinds for the market are getting stronger with the escalation in the Middle East conflict. Brent crude has shot up to around $108. If this high price sustains, or worse, spikes further, the impact on India’s GDP growth and consequently on corporate earnings will not be insignificant,” V K Vijayakumar, Chief Investment Strategist, Geojit Investments, observed.
2. US bond yields surge
Rising yields in the US are a major factor behind the fall in global stock markets, as they can potentially trigger massive foreign capital outflow.
US 10-year bond yields touched 4.98% on Friday, amid concerns over inflation and increasing US debt. According to experts, the market appears nervous about the prospect of rate hikes by the US Federal Reserve, which is also lifting yields.
“A strong headwind is the rise in U.S. bond yields. The 10-year yield, now at 4.98%, is approaching the 5% mark, which many regard as a possible inflection point for global equities. A correction in the global equity market is likely, but the timing is hard to predict,” said Vijayakumar.
(This is a developing story. Please check back for fresh updates.)
