New Delhi, Sept. 11: The Indian stock market suffered a sharp fall in morning trade on Friday, September 11, amid a weak global trend.
The Sensex fell more than 740 points, or 1 percent, to 74,160. The Nifty 50 also dropped about 250 points, or 1 percent, to an intraday low of 23,231.
The selloff spread across broader markets as well. The BSE 150 Midcap and 250 Smallcap indices fell by up to 1.5 percent.
Investors lost about ₹6 lakh crore within the first five minutes of trading. The market capitalisation of BSE listed companies fell to nearly ₹478 lakh crore.
It stood at nearly ₹484 lakh crore in the previous session. The sharp fall reflected the pressure across Indian equities during early trade.
Indian stock market hit by global selloff
Global market weakness added to pressure on Indian stocks. US equities fell overnight after fresh inflation data raised concerns about price pressures.
The Dow Jones Industrial Average and S&P 500 each declined 0.6 percent. The Nasdaq Composite also fell 0.65 percent.
Meanwhile, MSCI’s global stock gauge dropped 0.66 percent. Asian markets recorded deeper losses as global bond yields continued to rise.
Japan’s Nikkei, South Korea’s Kospi and Taiwan’s Taiwan Weighted index fell by up to 3 percent. Investors remained concerned about inflation and possible monetary tightening.
Crude oil prices also added to the pressure. Brent crude moved above $108 per barrel after renewed fighting involving Yemen based Houthi militants and Saudi backed forces.
V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said higher crude prices could hurt India’s growth and corporate earnings.
“Headwinds for the market are getting stronger with the escalation in the Middle East conflict. 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.
Indian stock market faces bond yield pressure
Rising US bond yields have also weighed on global equities. The US 10 year Treasury yield touched 4.98 percent on Friday.
Investors are watching the yield closely as it approaches the 5 percent level. Concerns about US inflation and debt have added to the pressure.
Markets also remain nervous about a possible US Federal Reserve rate hike next week. Higher US yields can increase pressure on foreign capital flows from emerging markets.
“A strong headwind is the rise in U.S. bond yields. The 10-year yield, now at 4.98%, is approaching the 5% mark, which many regard as a possible inflection point for global equities. A correction in the global equity market is likely, but the timing is hard to predict,” Vijayakumar said.
Meanwhile, developments in the Middle East have added to market concerns. US President Donald Trump reportedly said on Thursday that he did not regret the ongoing Iran war.
The Houthis also reportedly gained control of Yemen’s port city of Mocha. Their advance toward the Red Sea coast and strategic islands has raised concerns about wider oil supply disruptions.
Other domestic factors are also affecting sentiment. Strong IPO activity has attracted large amounts of investor money away from the secondary market.
“The booming Indian IPO market is the centre of attraction for investors now. The heavy oversubscription and attractive listing gains have drawn millions of investors into the IPO market. This has sucked off big money from the secondary market,” Vijayakumar said.
Investors are also awaiting the US Federal Reserve’s next policy decision. Reports indicate that markets expect a possible rate increase on September 16.
The expectation followed fresh US inflation data. The August Producer Price Index rose 0.4 percent after July data was revised to show a 0.1 percent gain.
The Indian rupee also added pressure on domestic equities. It fell 27 paise to 95.79 against the US dollar during early Friday trade.
Together, global market weakness, higher crude prices, rising US bond yields, IPO fund flows, rate hike concerns and rupee weakness have weighed on the Indian stock market.
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