The Sensex and Nifty retreated on Monday as climbing oil prices and Gulf tensions weighed on investor sentiment.
The Sensex closed at 76,132.81, a decline of 382.62 points, while the Nifty settled at 23,779.15, down 118.55 points.
Both indices had closed higher on Friday, at 76,515.43 and 23,897.70 respectively, before Monday’s reversal.
Growing expectations of another US Federal Reserve rate hike, following stronger US jobs data, added to the pressure on the market.
The Strait of Hormuz, through which about a fifth of global oil supply is shipped, is a critical chokepoint, meaning rising tension near it tends to feed quickly into oil prices and oil-importing markets like India.
Brent crude approached $97 a barrel during the session, its highest level in months, as the escalating US-Iran standoff around the Strait of Hormuz raised fears of supply disruption from the Gulf.
IT stocks were the worst-hit sector, since higher US interest rates weigh on Indian technology firms that generate a large share of their revenue from American clients.
Oil-sensitive sectors including aviation, paints, tyres and logistics also came under pressure as elevated crude prices raise input and fuel costs for these industries.
Foreign institutional investors were net sellers in Indian equities during the session, adding to the downward pressure alongside the global cues.
Stronger-than-expected US jobs data released over the weekend increased expectations that the Federal Reserve could raise interest rates again, further denting risk appetite in emerging markets including India.
The Nifty had struggled to sustain above the 24,000 mark in recent sessions, facing technical resistance near 24,025 even before Monday’s decline.
Both benchmark indices had closed higher in the previous session on Friday, with the Sensex at 76,515.43 and the Nifty at 23,897.70, before Monday’s reversal.
Bank Nifty and other rate-sensitive indices also traded weak through the session, tracking the broader risk-off mood among investors.
Bombay Stock Exchange building, Mumbai, Wikimedia Commons, CC BY 2.0
