Stock Market Today: Indian stock markets witnessed a dramatic reversal on Friday, October 23, as the Sensex and Nifty erased their early gains and plunged into negative territory, extending their losing streak to a fourth session.
Surging crude oil prices amid escalating Middle East tensions, a global sell-off and broad-based selling in mid-cap and small-cap stocks weighed on investor sentiment, turning a promising start into a bruising session for Dalal Street.
The BSE Sensex jumped 517 points, or 0.7%, to an intraday high of 73,766.51 in early trade before reversing sharply to hit a low of 72,487.47, a fall of 1,279 points from the day’s peak. The NSE Nifty 50 followed a similar trajectory, rising 99 points, or 0.4%, to 22,787.25 before sliding 380 points to an intraday low of 22,407.05.
The benchmarks had already lost around 2% over the preceding three sessions, and the latest decline underscored the fragile state of market sentiment as investors grappled with rising energy costs, global uncertainty and concerns over corporate earnings.
“Domestically, near-term market direction will depend on quarterly earnings delivery, as investors react to management commentary on demand outlook for coming quarters,” said Vinod Nair, head of research at Geojit Investments.
Sectors and Stocks
The Nifty IT index rose around 1%, supported by buying in technology stocks even as global peers weakened. This offered some support to the benchmarks during early trade but was insufficient to counter selling across the broader market.
The weakness extended well beyond large-cap stocks. The Nifty Smallcap 100 and Nifty Midcap 100 indices fell as much as 3%, while the Nifty Metal and Nifty Consumer Durables indices dropped around 3% each. The Nifty Auto, Nifty PSU Bank and Nifty Realty indices declined around 2% apiece.
Among individual stocks, Swiggy plunged 13% as brokerages raised concerns over the turnaround prospects of its quick-commerce business and margin pressures in food delivery. Colgate-Palmolive India dropped 4.6% after its September-quarter profit increased just 4%, fuelling concerns over its growth trajectory. Cyient bucked the trend, jumping 7.5% after reporting upbeat quarterly results.
Key reasons behind the crash
1. Crude oil surges towards $114 as Middle East tensions intensify
The biggest concern for Indian equities remained the sharp rise in crude oil prices, with Brent crude hovering near its highest levels since May amid uncertainty surrounding the conflict involving Iran and the broader Middle East.
Brent crude futures rose 0.5% to $113.73 per barrel, while US benchmark crude gained 0.6% to $100.08 per barrel. Brent had surged around 4% on Thursday and climbed from below $97 per barrel at the beginning of October, reflecting fears that disruptions to energy supplies could persist.
Attacks by Yemen’s Houthi rebels on Saudi Arabia, a major oil exporter, added to concerns about the security of regional energy infrastructure and global supplies.
For India, a sustained increase in crude oil prices poses risks because higher energy import costs can put pressure on inflation, the rupee, corporate margins and the country’s external balance. The prospect of persistently expensive oil also complicates the outlook for interest rates and economic growth, encouraging investors to reduce exposure to riskier assets.
V K Vijayakumar, chief investment strategist at Geojit Investments, described Brent crude’s surge towards $114 per barrel as a major negative for the economy and markets. However, he said other developments could help offset some of the pressure, including lower US Treasury yields, rupee appreciation and the prospect of liquidity returning to the market after IPO allotments.
2. Asian market weakness drag sentiment
Global market weakness provided another headwind for Indian equities. Asian stocks traded mostly lower on Friday after renewed concerns over artificial intelligence-linked stocks triggered a sharp sell-off on Wall Street.
Japan’s Nikkei 225 declined 1.7% to 61,825.26, while South Korea’s Kospi fell 2.4% to 5,403.32. Hong Kong’s Hang Seng bucked the trend, gaining 0.2% to 22,983.80, while China’s Shanghai Composite slipped 1.3% to 3,610.52. Australia’s S&P/ASX 200 declined 0.2% to 8,777.
Overnight, the S&P 500 fell 1.2%, while the Nasdaq Composite plunged 2.6%, marking its worst session since July. Technology stocks bore the brunt of the selling as investors reassessed the outlook for AI-related businesses and valuations.
3. Nifty technical levels and outlook
From a technical perspective, traders will watch whether the Nifty can reclaim key resistance levels and stabilise after the sharp intraday reversal.
Hemang Gor, senior research analyst for derivatives and technical research at Axis Direct, said holding the gap-up levels and sustaining above the 22,800 resistance mark could trigger a short-covering rally towards 23,000. He identified 22,500 as a critical support level for the benchmark index.
For investors, the sharp correction may create opportunities in fairly valued large-cap companies with healthy growth prospects, but the direction of crude oil prices, foreign fund flows and September-quarter earnings will remain crucial determinants of Dalal Street’s next move.
Outlook Ahead
The broader outlook remains uncertain as investors balance elevated crude oil prices and global volatility against potential domestic liquidity support. Vijayakumar pointed to the decline in the US 10-year Treasury yield to 4.96% and the rupee’s appreciation to 94.70 against the dollar as factors that could help restrain foreign institutional investor selling.
He also highlighted the prospect of more than ₹3 lakh crore in IPO funds returning to the financial system after allotments are completed by the following Monday, potentially providing a liquidity boost to equities next week.
However, any recovery may not be uniform across the market. Vijayakumar expects large-cap stocks to lead a potential rebound, given their relative resilience, while small-cap stocks could remain under pressure because of valuations that have risen faster than underlying fundamentals.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
