- Indian benchmark indices crashed Thursday, Sensex and Nifty sharply declined.
- Higher US bond yields fueled Federal Reserve rate hike expectations.
- Crude oil above $100, Iran-US tensions, heightened geopolitical uncertainty.
The Indian benchmark indices crashed on Thursday as the Sensex fell 1,247 points to close 73,580 and the Nifty declined 361 points to settle at 23,085 at 3:30 PM.
Previously, during the mid-day, the Sensex plunged more than 1,100 points, while the Nifty slipped below the 23,100 mark. At around 2:33 pm, the Sensex was down 1,183 points, or 1.58 per cent, at 73,644, while the Nifty fell 376.20 points to 23,063.
The Indian share market came under pressure on Thursday as a combination of global and domestic factors weighed on investor sentiment. Rising US bond yields, increased expectations of a Federal Reserve rate hike, crude oil prices moving above $100 a barrel, heightened Iran-US tensions and selling in financial stocks emerged as key pressure points.
Here are the major factors behind the market decline:
1. US Bond Yields Surge
One of the biggest concerns for investors is the sharp rise in US Treasury yields. The 10-year US Treasury yield climbed to around 5.11 per cent, its highest level since 2007, after fresh data pointed to stronger US business activity.
The rise in yields has also increased expectations that the US Federal Reserve may keep interest rates higher for longer.
Higher US yields can make dollar assets more attractive. This can put pressure on emerging markets such as India and influence foreign investment flows.
2. Fed Rate Hike Bets Rise
Stronger US economic data has also changed expectations around the Federal Reserve’s next moves.
According to market data cited by reports, traders increased their bets on an October rate hike, with the probability moving above 66 per cent.
For equity markets, the concern is straightforward. If interest rates stay higher for longer, borrowing costs can remain elevated and valuations of riskier assets can come under pressure.
3. Crude Oil Moves Above $100
Crude oil has emerged as another major concern for Indian investors. Brent crude moved above $100 a barrel, with prices touching around $102 in morning trading. Another market report later put Brent at $106.14 a barrel.
For India, expensive crude is particularly important because the country imports a large share of its oil requirements. A prolonged rise in crude can increase the import bill and put pressure on inflation, the rupee and corporate costs.
4. Iran-US Tensions Add To Uncertainty
The geopolitical situation is adding another layer of risk. Renewed tensions between Iran and the US have raised concerns about oil supplies from the region.
Any disruption could push crude prices higher, creating another challenge for oil-importing economies. Markets are therefore watching developments around the conflict closely.
A sustained rise in crude could affect inflation expectations and the outlook for interest rates.
5. Financial Stocks Take A Hit
The pressure was not limited to global factors. Financial stocks were among the biggest losers on Thursday after the insurance regulator proposed changes to commissions and distribution payouts.
The proposals triggered selling in insurance distributors, banks and non-bank lenders with significant insurance distribution income.
The financial sector has a large weight in the benchmark indices. As a result, a broad decline in banks and financial companies can quickly drag both the Sensex and Nifty lower.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: abplive.com
