Sensex dives 700 pts intraday; Nifty below 23,250

Benchmark equity indices Sensex and Nifty 50 opened sharply lower on Friday as oil prices surged amid escalating West Asia tensions, while rising bond yields fuelled concerns over a possible Fed rate hike next week.

The BSE Sensex opened lower at 74,309 and extended the losses to make a low of 74,160 in early trade, down 742 points or 1 per cent. Similarly, the Nifty 50 index opened in he red at 23,270 and hit a low of 23,231, down 246 points or 1.05 per cent.

Analysts said that headwinds for the market are getting stronger with the escalation in the West Asia conflict. VK Vijayakumar, chief investment strategist, Geojit Investments, said that elevated crude oil prices are keeping risk appetite subdued.

“Financial markets are adjusting to a stronger probability of monetary tightening, with federal funds futures indicating a greater than 70 per cent chance of a rate hike next week,” Devarsh Vakil, head of prime research at HDFC Securities, said.

As of 9:27 AM, the 30-share Sensex traded 630 points or 0.84 per cent lower at 74,270, while the NSE Nifty index was down 222 points or 0.94 per cent at 23,256.

On the sectoral front, all the indices were trading in the red. The Nifty Realty tanked over 3.5 per cent, while the Nifty Metal skidded 2.8 per cent. The Nifty Bank index was down more than 1 per cent. In the broader market, the indices mirrored the benchmarks to trade lower. Both the Nifty Midcap 100 and Nifty Smallcap 100 were down 1.3 per cent each.

India VIX, the fear gauge index, spiked more than 6 per cent to 12.5.

The advance-decline ratio was extremely weak, reflecting the selling pressure, with 2,377 stocks declining against 504 advances. Nearly 90 stocks remained unchanged.

From the Sensex pack, Tech Mahindra, Infosys, HCL Tech, Bajaj Finance and ITC were trading in the green, gaining up to 1.5 per cent. On the other hand, M&M, Bajaj Finance, Tata Steel, IndiGo and UltraTech Cement were the top losers, falling more than 2 per cent each.

Stock market crash today: Reasons

Oil prices: Oil prices rose and are on track to end the week at over $100 a barrel for the first time ​since mid-May. Brent crude futures surged 0.42 per cent to $108.1 a barrel, while US West Texas Intermediate climbed 0.33 per cent to $102.8. READ MORE

“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,” Vijayakumar said.

Bond yields: Vijayakumar added that an “equally strong headwind is the rise in US bond yields”. The 10-year yield now sits at 4.96 per cent — its highest level since late 2023. He said that as it approches 5 per cent mark, many regard this as a possible inflection point for global equities. “A correction in global equity market is likely, but the timing is hard to predict.”

Primary market: Also, the booming IPO market is the centre of attraction of investors now. The heavy over subscription and attractive listing gains have drawn millions of of investors into the IPO market. This has sucked off big money from the secondary market. Meanwhile, NSE has announced the price band and subscription date for its much-awaited IPO.

Asian stocks tumble: Asian stocks fell sharply as oil and bond yields triggered a broader risk-off move. At the last check, Japan’s Nikkei 225 index was down 2.8 per cent, followed by South Korea’s Kospi which fell 2.3 per cent. Australia’s S&P/ASX 200 lost 1.2 per cent.

US markets: US markets closed lower overnight as stronger producer inflation data s fueled concerns over another rate hike. The ​Dow Jones Industrial Average lost 0.6 per cent, the S&P 500 slipped 0.5 per cent, and the Nasdaq Composite settled 0.65 per cent lower.

ECB raises interest rates: European stocks fell to two-month lows after the European Central Bank raised interest rates for the second time this year to fight off inflation jump. ECB’s benchmark deposit rate now sit at 2.5 per cent, the upper end of the “neutral” range considered by policymakers to neither restrict nor stimulate economic growth. Devarsh said that ECB raised its rate in line with expectations as the conflict continues to fuel inflationary pressures. The Bank of Japan is expected to hike rates to 1.25 per cent following a highly anticipated meeting, on Friday next week.