Indian equity markets witnessed a sharp selloff on Monday, 11 May, with investors losing more than Rs 4 lakh crore in a single session, amid mounting concerns over the economic fallout of elevated crude oil prices and Prime Minister Narendra Modi’s call for austerity.
The benchmark Sensex plunged 1,313 points, or 1.70 per cent, to close at 76,015.28, while the Nifty 50 declined 1.50 per cent to settle at 23,815.85. The broader markets also ended deep in the red, with the BSE Midcap and Smallcap indices falling 1.26 per cent and 0.96 per cent, respectively.
However, market participants attributed nearly Rs 4 lakh crore of the erosion in investor wealth directly to deteriorating sentiment following Mr Modi’s remarks urging citizens to cut back on fuel consumption and refrain from buying gold for a year.
During a speech on Sunday against the backdrop of the escalating West Asia crisis, the Prime Minister urged Indians to use petrol, diesel and cooking gas “with great restraint”, warning of the economic risks arising from the prolonged geopolitical conflict.
The comments rattled investor sentiment, particularly across consumption-linked sectors, triggering heavy selling in consumer durables, automobiles, real estate and banking shares.
Nifty Consumer Durables emerged as the worst-performing sectoral index, plunging 3.73 per cent, followed by Realty, down 3.05 per cent, PSU Banks, down 2.52 per cent, and Media, which slipped 2.49 per cent. The Auto index declined 1.86 per cent.
Among the Nifty 50 constituents, Titan Company, InterGlobe Aviation and State Bank of India led the losses.
The broader weakness came amid rising fears that the continuing tensions between the United States and Iran could further disrupt global oil supplies. Brent crude surged more than 4 per cent to reclaim the USD 105 per barrel mark after hopes of a diplomatic breakthrough faded.
US President Donald Trump reportedly rejected Iran’s peace proposal, while Israeli Prime Minister Benjamin Netanyahu warned that Tehran’s nuclear ambitions remained a major threat despite recent military operations.
Analysts said the prolonged rise in oil prices poses a serious risk for India, which imports nearly 85-90 per cent of its crude oil requirements. Higher energy costs are expected to stoke inflationary pressures, widen the current account deficit and weigh on economic growth.
Adding to concerns, the Indian rupee weakened sharply by 85 paise to close provisionally at a record low of 95.34 against the US dollar, pressured by rising crude prices and strong demand for the greenback.
Market experts warned that continued rupee weakness could accelerate foreign capital outflows and potentially force tighter monetary policy measures in the months ahead.
The latest fall has extended the market’s losing streak to three consecutive sessions. Over this period, the Sensex has dropped 1,973 points, or 2.5 per cent, while the Nifty has declined 2.1 per cent.
The selloff also erased the gains made in April, when benchmark indices had rallied nearly 7 per cent on hopes of stronger earnings growth and easing global uncertainties. |
