Sensex closes at 32-month low as oil surge and foreign selling bite
India's benchmark Sensex closed at its lowest in 32 months on Thursday, with the Nifty 50 down 1.64% at 22,231.8 and the Sensex 1.44% weaker at 71,593.24. The falls compounded pressure from the Reserve Bank of India's hawkish rate increase a day earlier, and came amid surging oil prices, rising global bond yields and a weaker rupee, all of which the market read as inflationary.
Foreign investors stepped up selling, offloading a net 469.9 billion rupees ($4.86 billion) over nine days, according to the report. Year-to-date outflows were put at a record $30.4 billion. The benchmark 50-stock index has lost nearly 15% so far this year, against a 23% gain for MSCI's emerging markets index, which the report attributed to fund flows into artificial-intelligence-linked stocks.
On Wednesday the Reserve Bank of India raised its benchmark repo rate by 25 basis points to 5.5% and signalled further increases as it seeks to contain inflation. Brent crude surged 4% to more than $104 a barrel, with Gulf shipping attacks and a US hurricane intensifying supply concerns. "Markets are currently under pressure from a web of interconnected factors, rising global bond yields on inflation concerns, a weakening rupee and sustained foreign investor outflows, all of which are, at their core, linked to elevated oil prices," said G Chokkalingam, founder and head of research at Equinomics Research. He added that equities face further heat as oil rises incrementally and monsoon deficits and low water storage compound price pressures in the economy.
All 16 major sectors fell. Small-caps and mid-caps lost 2.3% and 2.5% respectively, while the three heaviest benchmark stocks — HDFC Bank, ICICI Bank and Reliance Industries — fell 1.5%, 0.6% and 2.5%. The Nifty 50 and Sensex slipped back into oversold territory after briefly recovering last week, with relative strength indexes below 30.
Tata Consultancy Services slipped 0.2% ahead of September-quarter earnings due after the close, with analysts expecting an 11.2% year-on-year rise in quarterly revenue and a 14.2% increase in profit. Paytm, One Mobikwik and Pine Labs fell 5.2%, 4.5% and 4.4% on reports that the planned 15 October rollout of merchant fees on certain digital-payment transactions could be delayed by several months.
