In a turbulent session, the stock market experienced a significant downturn on Thursday, with the Nifty50 and BSE Sensex facing sharp declines. The markets reacted negatively after the US Federal Reserve decided to maintain its policy interest rates, coupled with a steep rise in oil prices, which surged past the $110 per barrel mark.
The BSE Sensex plummeted by more than 2,500 points, while the Nifty50 dipped below the crucial 23,200 level at one point. Nifty50 closed at 23,002.15, marking a loss of 776 points or 3.26%, while the BSE Sensex settled at 74,207.24, down 2,497 points or 3.26%. This dramatic fall erased over ₹11 lakh crore from the total market capitalization of BSE-listed companies, bringing it to ₹428 lakh crore.
Investor sentiment soured due to escalating crude oil prices and a hawkish outlook from the US Federal Reserve. Market breadth was heavily negative, with all indices on the National Stock Exchange (NSE) posting losses. The Nifty Realty index was the hardest hit, declining more than 3%, closely followed by the Nifty Auto and Nifty Private Bank indices, each dropping near 3%.
The cause behind the rising oil prices stemmed from escalating geopolitical tensions, particularly in the Middle East. Crude oil prices climbed back above $110 due to the closure of the Strait of Hormuz and Iranian missile attacks that caused extensive damage to Qatar’s Ras Laffan LNG facility. This incident raised alarms about the stability of energy supplies, prompting warnings from US officials. President Donald Trump cautioned Iran against further aggression towards Qatari LNG assets, indicating that future attacks could lead to massive destruction in the region.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, highlighted mounting uncertainty due to worsening conditions in the Middle East. He pointed out that while rising oil prices are detrimental for oil-importing nations like India, there is always a potential scenario where conflicts may resolve quickly, causing a drop in crude prices.
Meanwhile, the Federal Reserve, led by Chair Jerome Powell, chose to keep interest rates steady, attributing this decision to persistent inflation concerns and geopolitical tensions. Powell indicated that economic uncertainty remains high, with projections for inflation rising to 2.7% by year-end—up from earlier estimates of 2.4%—largely driven by increased oil prices.
Adding to the market’s woes, shares of HDFC Bank plunged nearly 8% after the announcement of the resignation of its part-time Chairman, Atanu Chakraborty. The abrupt leadership change put downward pressure on the market, particularly affecting key benchmarks where HDFC Bank has significant influence.
Global markets also faced sell-offs following the Fed’s announcement. The S&P 500 recorded its lowest close in nearly four months, while Asian markets followed suit with declines in indices across the region. Japan’s Nikkei dropped by 2.5%, and Hong Kong’s Hang Seng slipped by 1.4%.
US Treasury yields saw an uptick after several sessions of declines, with the benchmark 10-year yield rising to 4.265%. Foreign institutional investors continued their sell-off streak in Indian equities, with net outflows totaling ₹2,714 crore, marking the 14th consecutive session of selling—further intensifying the bearish mood.
Moreover, the Indian rupee faced increasing pressure, hitting a record low of 92.63 against the US dollar. Analysts attributed this decline to rising import costs, especially due to elevated crude oil prices, further complicating the macroeconomic outlook for India.
As markets navigate through this volatility, concerns over external factors—including geopolitical tensions and fluctuating oil prices—continue to weigh heavily on investor sentiment and economic forecasts.
