Mumbai, Oct. 8 -- Indian stock markets came under heavy selling pressure on Thursday, with benchmark indices extending their losses as rising crude prices and the Reserve Bank of India's shift towards a tighter monetary policy weighed on investor sentiment.
The Sensex opened 150 points lower, while the Nifty declined around 70 points at the start of trading. The selling intensified through the session, with the Sensex falling more than 1,100 points and the Nifty dropping below the 22,250 level. At around 2:10 pm, the Sensex was down 1,151 points, or 1.59 per cent, at 71,477, while the Nifty50 declined 395 points, or 1.75 per cent, to 22,209. The sell-off came a day after the RBI raised its benchmark repo rate by 25 basis points to 5.5 per cent and shifted its policy stance from neutral to calibrated tightening. The move has raised concerns about borrowing costs and the outlook for economic growth and inflation.
Rising crude prices added to the pressure. Brent crude climbed nearly 4 per cent to a high of $104.09 a barrel as concerns over supplies from the Middle East continued amid the ongoing regional conflict. Higher oil prices are particularly significant for India because they can add to inflationary pressures and put further pressure on the rupee. The decline in equities also resulted in a sharp erosion of investor wealth. The market capitalisation of BSE-listed companies fell by around Rs 11.15 trillion from Wednesday's close, according to the latest market update. The rupee also remained under pressure, trading close to its record low against the US dollar. Elevated crude prices, a stronger dollar and higher US Treasury yields have added to the pressure on the Indian currency.
The broader market remained weak as investors assessed the impact of tighter monetary conditions and elevated energy prices. Market participants are likely to track developments in crude prices, the rupee and global markets closely for further direction.
Published by HT Digital Content Services with permission from Millennium Post.