Mumbai's benchmark Sensex fell 548 points on Monday, surrendering the gains of the previous session as a spike in global oil prices and continued selling by foreign investors unsettled Indian equities. The decline came despite a firm rupee, which closed nearly 1 per cent higher against the US dollar.
Among the 30 Sensex firms, ITC was the biggest loser, dropping 3.23 per cent. Tech Mahindra fell 3.1 per cent, Hindustan Unilever 2.1 per cent, Larsen & Toubro 1.87 per cent, State Bank of India 1.78 per cent and Tata Consultancy Services 1.67 per cent. Bharat Electronics, Mahindra & Mahindra, Kotak Mahindra Bank and HCL Tech were among the few winners.
Why Indian markets fell on Monday
Analysts pointed to a combination of pressures. Brent crude, the global oil benchmark, jumped 1.14 per cent to USD 105.8 per barrel. Foreign institutional investors offloaded equities worth Rs 3,568.90 crore on Friday, according to exchange data, and the selling mood carried into the new week.
“Indian markets failed to hold on to early gains as sentiment weakened amid a rise in the 10-year bond yield to a three-year high and continued FII outflows driven by external uncertainties,” said Vinod Nair, Head of Research at Geojit Investments Limited. He added that banking stocks led the decline after the Reserve Bank of India raised the daily cash reserve ratio requirement to absorb surplus liquidity.
Inflation and the rupee
Retail inflation rose to 5.54 per cent in September, the highest under the new consumer price index series, driven mainly by costlier food items, according to official data released after market hours. Garima Kapoor, Deputy Head of Research and Economist at Elara Capital, expects the RBI to remain on a path of rate hikes. “We see another 2 hikes from the RBI this financial year,” she said.
The rupee, by contrast, soared 93 paise to close at 95.78 against the US dollar, supported by regulatory action. On Saturday the RBI tightened rules on forex derivatives trades to curtail speculative bets against the currency and asked banks to create a 20 per cent reserve for dollar purchases above USD 2 million.
“Concerns that the RBI's latest measures to support the rupee could tighten banking-system liquidity weighed on financials, while weakness in index heavyweights including Reliance Industries, ITC and technology stocks accelerated the reversal,” said Hariselvan Radhakrishnan, Founder and CEO of HST Wealth.
Broader market bucked the trend
The wider market advanced even as blue chips fell. The BSE SmallCap Select index jumped 1.65 per cent and the MidCap Select index gained 0.66 per cent. Housing Finance rose 1.86 per cent, Capital Goods 1.31 per cent and Realty 0.80 per cent. Hospitals, FMCG and PSU Bank indices were among the decliners.
In Asian trading, South Korea's Kospi dropped 3.65 per cent and Shanghai's SSE Composite settled lower, while Hong Kong's Hang Seng ended marginally higher. European markets traded higher and US markets had closed higher on Friday.
On Friday, the Sensex had jumped 879.09 points, or 1.23 per cent, to settle at 72,472.33, while the Nifty rallied 288.65 points, or 1.30 per cent, to end at 22,520.45. Monday's reversal erased most of that optimism in a single session.
What it means for Eswatini
For readers in Eswatini, the turbulence matters in practical terms. India is a significant trading partner and a source of medicines, machinery and consumer goods, and a weaker rupee combined with higher crude prices tends to feed through to freight and import costs across the region. Volatility on emerging markets also reminds investors and policymakers in Mbabane that global capital can turn quickly when oil climbs and bond yields rise. Steady hands, at home and abroad, remain the soundest response.
FAQ
How much did the Sensex fall on Monday?
The Sensex dropped 548 points on Monday as oil prices rose and foreign investors continued selling Indian equities.
What drove the decline?
Analysts cited a 1.14 per cent jump in Brent crude to USD 105.8 per barrel, foreign institutional outflows of Rs 3,568.90 crore on Friday, a three-year high in the 10-year bond yield, and RBI measures that tightened banking liquidity.
How did the rupee perform?
The rupee gained 93 paise, nearly 1 per cent, to close at 95.78 against the US dollar, supported by RBI measures to curb speculation against the currency.