The Sensex and Nifty closed lower on Monday amid a surge in crude oil prices and rising Gulf tensions.
The Sensex ended the session at 76,132.81, down 382.62 points, while the Nifty settled at 23,779.15, down 118.55 points.
Both benchmarks had closed higher on Friday, at 76,515.43 and 23,897.70 respectively, ahead of Monday’s reversal.
Stronger US jobs data over the weekend also raised expectations of another Federal Reserve rate hike, weighing further on investor sentiment.
The Strait of Hormuz, through which about a fifth of the world’s oil supply passes, is a critical global chokepoint, so tensions near it tend to push oil prices, and oil-importing markets like India, quickly in one direction.
Bank Nifty and other rate-sensitive indices also traded weak through the session, tracking the broader risk-off mood among investors.
Market participants said they would watch upcoming US Federal Reserve commentary and further developments in the Gulf region for cues on near-term direction.
Brent crude approached $97 a barrel during the session, its highest level in months, as the escalating US-Iran standoff around the Strait of Hormuz raised fears of supply disruption from the Gulf.
IT stocks were the worst-hit sector, since higher US interest rates weigh on Indian technology firms that generate a large share of their revenue from American clients.
Oil-sensitive sectors including aviation, paints, tyres and logistics also came under pressure as elevated crude prices raise input and fuel costs for these industries.
Foreign institutional investors were net sellers in Indian equities during the session, adding to the downward pressure alongside the global cues.
Stronger-than-expected US jobs data released over the weekend increased expectations that the Federal Reserve could raise interest rates again, further denting risk appetite in emerging markets including India.
The Nifty had struggled to sustain above the 24,000 mark in recent sessions, facing technical resistance near 24,025 even before Monday’s decline.
Bombay Stock Exchange building, Mumbai, Wikimedia Commons, CC BY 2.0
