Stock market benchmarks, the Sensex and the Nifty 50, extended losses for the fourth consecutive session on Thursday, 23 July, amid spiking crude oil prices driven by the Middle East conflict.
The Sensex dropped 364 points, or 0.47%, to end at 76,391.39, while the Nifty 50 finished at 23,869.60, down 127 points, or 0.53%.
Broader markets underperformed as the Nifty Midcap 100 and Nifty Smallcap 100 indices plunged 1% each.
Investors lost over ₹3 lakh crore in a single day as the overall market capitalisation of BSE-listed firms dropped to below ₹477 lakh crore from ₹480 lakh crore in the previous session.
In these four sessions, the Sensex has crashed 1,760 points, or 2.3%, while the NSE counterpart has shed 465 points, or almost 2%.
Investors’ wealth has declined by ₹4 lakh crore in these four days as the cumulative market capitalisation of firms listed on the BSE was ₹481 lakh crore last Friday (17 July).
What drove the market down?
The domestic market has been in the red due to a sustained rise in crude oil prices, raising concerns about a strain on India’s fiscal position, an inflation flare-up, monetary tightening, and corporate earnings downgrades.
Rising for the fifth consecutive session, Brent crude September futures jumped 4% to trade near $99 per barrel when the Sensex closed.
Oil prices jumped on Thursday after Iran-backed Houthis said they hit two Saudi oil tankers in the Bab el-Mandeb strait in the Red Sea as part of a naval blockade on Saudi Arabia.
The attack on Saudi oil tankers raised fears that the disruption to oil supplies could soon spread beyond the Strait of Hormuz.
Higher oil prices have raised inflationary pressure and are dragging the Indian rupee down. Provisional figures showed the rupee declined 4 paise to settle at 96.57 per dollar on Thursday. The domestic currency is down more than 2% against the dollar so far this month.
The US military continued its strike on Iran for the 12th consecutive night after the breakdown of the MoU between the two sides, which had temporarily halted the hostilities that began on February 28.
Meanwhile, as per reports, Iran vowed on Thursday to keep striking the region so long as it remains under attack.
“With crude oil prices approaching the $100 per barrel amid concerns over further disruptions to global energy supplies, investor sentiment remained subdued as markets reassessed inflation risks and corporate margins,” Vinod Nair, Head of Research, Geojit Investments, noted.
“Recent macroeconomic indicators suggest that prolonged geopolitical tensions are increasingly filtering into the domestic economy, reflected in rising WPI and a moderation in business activity. Elevated energy prices have also reinforced expectations of a higher-for-longer global interest rate environment, dampening risk appetite toward emerging markets,” Nair added.
Nifty gainers and losers
As many as 30 stocks ended in the red in the index, with Adani Enterprises, Nestle India, and Shriram Finance as the top laggards, falling up to 4%.
On the other hand, SBI Life Insurance Company, Bajaj Auto, and Mahindra and Mahindra ended as the top gainers, rising up to 3%.
Sectoral indices today
Barring Nifty Auto (up 0.70%) and Media (up 0.22%), all sectoral indices ended in the red.
“Auto stocks outperformed on the back of strong quarterly earnings, highlighting that despite prevailing market volatility, investors continue to favour businesses demonstrating resilient earnings growth, healthy demand trends and stronger visibility on future performance,” said Nair.
Nifty Realty (down 1.81%), Oil and Gas (down 1.02%), and PSU Bank (down 1%) lost significantly.
Bank Nifty dropped 0.94%, while the Financial Services index declined 0.75%.
Nifty’s technical outlook
According to Shrikant Chouhan, Head of Equity Research at Kotak Securities, as long as the index trades below 23,950, a weak structure may continue, and it could slip to 23,700-23,650. On the flip side, above 23,950, the sentiment could change, and it could bounce back to 24,050-24,100.
Rupak De, Senior Technical Analyst at LKP Securities, noted that the Nifty 50 broke below the upward consolidation on the daily chart, suggesting a rise in bearish sentiment in the market. Besides, it fell below the critical short-term moving average.
“The RSI indicator is in a bearish crossover and is falling. Sentiment looks negative, and the market might continue to remain weak in the near term. On the lower end, the index might fall towards 23,600 or even lower in the near term. On the higher end, 24,000 might remain a resistance for the next few days,” said De.
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