Stock market crash: The Indian stock market reversed a two-day buying trend and declined nearly 1 per cent in Monday's intraday deals after oil prices remained elevated and selling in index heavyweight private bank stocks gained steam following the announcement of their quarterly earnings.
BSE barometer Sensex declined 765 points or 1.02 per cent to 73,964, while its NSE counterpart Nifty 50 lost 224 points or 0.97 per cent to 22,923 in intraday deals today.
The broader market sentiment remained weak as the Nifty Midcap and Nifty Smallcap 100 indices lost 0.65 per cent and 0.75 per cent, respectively, signalling an across-the-board selloff.
"The escalation of tensions in Hormuz and the consequent surge in Brent crude to $109 will act as a strong headwind to the market. Even though the attractive valuations of the large-caps and the appreciation of the rupee have turned the stance of FIIs towards India a bit positive, it is unlikely to sustain, given the high crude price," said Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments. Check - TOP GAINERS NSE | TOP LOSERS NSE
Why is the Indian stock market falling?
Here are the four key reasons behind the stock market selloff:
Also Read
1. Bank stock selloff weighs
India's largest private bank lenders such as HDFC Bank, ICICI Bank and Axis Bank were the top index drags today on Dalal Street following their September quarter results. These three stocks together accounted for over 50 per cent of the selling in the Sensex.
While analysts remained positive on HDFC Bank stock on better-than-expected earnings, analysts see a near-term overhang until a replacement is appointed for DMD Kaizad Bharucha. Meanwhile, clarity on new appointments and changes at the top management team will be key to watch. HDFC Bank shares lost nearly 3 per cent.
Meanwhile, Axis Bank's mixed quarter resulted in a miss on Q2 earnings. Elara Capital said that the lender lagged peer set on core fundamentals, resulting in a 5 per cent crash.
Overall, the private bank index was also down 1.7 per cent today.
2. FPI selling at 6-month high
The selling by foreign portfolio investors (FPIs) has hit a six-month high in October as elevated crude oil prices continues to play spoilsport. The overall selling this month is at ₹52,100 crore, third highest this year after ₹60,847 crore sold in April.
Finance Minister Nirmala Sitharaman, according to media reports, has flagged capital outflows as one of the biggest risks for India in 2027 amid excess market liquidity. So far this year, FPIs have sold a record ₹3.12 trillion.
3. Oil prices remain elevated
Despite a 2 per cent decline today, oil prices continue to remain elevated at $108 per barrel in Monday's session. The crude prices jumped 11 per cent last week amid tightening supplies and strong shipping fuel demand. Iranian strikes on tankers near the Strait of Hormuz disrupted oil flows.
Higher crude poses macroeconomic risks for India as it weakens the current account deficit and pressurises the domestic currency. In today's trade, Brent crude futures declined 2.5 per cent to $107 but remained above comfortable levels.
4. Technical outlook
Hitesh Rathi, Technical Analyst - Equity & Derivatives, Angel One, said that unless the rally witnesses meaningful participation from the broader market, the combination of narrow market leadership and stiff overhead resistance is likely to limit further upside. Under these circumstances, the prevailing risk-reward setup does not particularly favour the bulls at this stage, he noted.
In terms of levels, the 23250-23300 band is an immediate hurdle for Nifty, followed by a stronger resistance at the 23450-23500 zone. On the flip side, the 23050-23000 zone is an immediate cushion, followed by a stronger cushion at the 22900 mark, he observed.
Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.