Indian Markets Tumble! Sensex Plummets 1,200+ Points: What's Driving the Sell-Off?
Indian Markets Tumble! Sensex Plummets 1,200+ Points: What's Driving the Sell-Off?
Indian stock market in turmoil! Sensex crashes over 1,200 points, Nifty below 23,100. US bond yields, oil prices, and Fed rate hike fears trigger a massive sell-off. Find out why!
Indian equity markets experienced a dramatic downturn on Thursday, with benchmark indices Sensex and Nifty plummeting amidst weak global cues and rising US bond yields. The Sensex closed down a significant 1,247.71 points, or 1.67%, settling at 73,580.54, while the Nifty 50 also saw a sharp decline of 383.70 points, or 1.64%, finishing the day at 23,063.10.
The sell-off wasn't confined to large-cap stocks; the Nifty Midcap 100 and Nifty Smallcap 100 indices each fell around 1%, indicating broad-based weakness across the market. Every sectoral index traded in negative territory, with Nifty Private Bank and Nifty Financial Services indices losing approximately 2% each. Several factors contributed to this market turbulence.
A primary reason was the sharp rise in US Treasury yields.
Data showing US business activity accelerated to its strongest level in over five years in September led to a surge in yields. The interest rate-sensitive 2-year US Treasury yield briefly touched its highest level since May 2024, while the benchmark 10-year Treasury yield rose to 5.106%, its highest since 2007.
Higher bond yields make fixed-income investments more attractive, often drawing capital away from equities. Expectations of a US Federal Reserve rate hike also intensified, with traders now assigning a 66% probability to an October rate increase, up from 53% earlier. This prospect further pressured equities.
Additionally, rising oil prices, with crude moving back above $102 per barrel, added to investor concerns. The Indian rupee also felt the pressure, declining 14 paise to 95.87 against the US dollar amid rising oil prices and bond yields.
Experts noted that persistent FII selling in Indian markets is keeping sentiment cautious, with global developments like US-Iran relations and upcoming international meetings potentially adding to currency market volatility. Individual stocks faced significant headwinds. Bajaj Finance was the biggest drag on the Sensex, plunging over 5%.
Axis Bank and Bajaj Finserv also saw declines of 3-4%, while IndiGo, Kotak Mahindra Bank, Asian Paints, HDFC Bank, and Trent were down 1-2%.
The insurance sector, in particular, took a severe hit.
Shares of PB Fintech, operator of Policybazaar, plummeted as much as 30% after IRDAI proposed changes to the insurance sector, wiping out over ₹26,200 crore from its market value.
Insurance distributor Turtlemint Fintech Solutions also saw its shares fall 20%, hitting its lower circuit.
