New Delhi: Stock markets crashed on Thursday, with benchmark Sensex losing 2.24%, as investors, rattled by the rupee’s free fall, hammered down shares.
The Nifty too was down 2.39% at the end of day’s trading.
The rupee hit the new low of Rs 73.81 against the US dollar in intraday trading before recovering some of the lost ground. The domestic currency had breached the psychological mark of 73 against the US dollar on Wednesday.
The 806-point fall in the Sensex is the ninth worst in history and the biggest one-day drop since February 2, 2018.
Oil marketing companies HPCL, BPCL and IOC fell 18.24-22.44% after finance minister Arun Jaitley said state-owned-oil marketing companies will absorb Re 1 per litre on retail sale of petrol and diesel.
HPCL was hit the hardest, with its share price tanking by 22.44% at the NSE. BPCL’s share plunged 18.88% while IOC’s stock value plummeted 18.24%.
RIL, Eicher Motors and Hero MotoCorp were other big losers of the day. RIL fell 8.02%, Eicher Motors 7.47% and Hero MotoCorp 5.51%.
With the Reserve Bank of India set to announce its bi-monthly credit policy on Friday, the market mood was cautious.
Rising oil prices
Apart from the falling, the continued rally in the global oil market also weighed on investors sentiments. The benchmark Brent oil crossed $86/barrel on Thursday, highest in last four years, fueling speculation of return to the above $100 price.
According to news agency Reuters, oil traders have piled into wagers that US crude oil could surge to $100 a barrel by next year, a milestone that until recently many considered unthinkable due to record US production growth and relatively flat global demand.
While big oil exporters claim supply is ample, hedge funds and speculators are taking a contrarian view, betting the market could rally further when US nuclear sanctions on Iran kick in on November 5.
Rising bond yields
Hardening bond yields have also triggered panic in the domestic equity market. India’s ten-year bond yield was hovering above 8.18% on Thursday against previous close of 8.11%. Bond yields have spiked 84 basis points on a year-to-date basis.
Flight of foreign capital
The market is concerned over sustained foreign money outflows as foreign portfolio investors sold shares worth Rs 455.02 crore in October so far. They sold shares worth Rs 1,488 crore in September. However, their net investment stood at Rs 262.72 crore in August, as per data available with depository NSDL.
CAD concerns
The rupee has lost nearly 14% of its value against the dollar this year on growing doubts about the government’s ability to finance current account deficit. The government has taken steps to curb imports and ease overseas borrowings by Indian corporate in a bid to assure panicky investors and shore up the rupee. However, the market has shrugged off the government intervention.
The rupee has lost nearly 14% of its value against the greenback this year.