Sensex Drops 548 Points as Oil Spike Spurs Selloff

MUMBAI: Indian equities gave up a strong start and closed sharply lower on Monday as selling in IT, banking and consumer stocks erased early gains, with elevated crude prices and persistent foreign selling weighing on sentiment.

The BSE Sensex swung wildly through the session. It jumped more than 350 points at the open and touched an intraday high of 72,884.25, then slid to a low of 71,676.10 before closing down 547.65 points, or 0.76 percent, at 71,924.68. The NSE Nifty 50 peaked at 22,651.10, troughed at 22,304.45 and settled 157.10 points, or 0.70 percent, lower at 22,363.35.

What dragged the market down

Profit-taking at higher levels did the damage. Both indices opened higher, the Nifty at 22,593.20 and the Sensex at 72,771.32, but sellers took charge by mid-session and never let go.

Information technology, FMCG and banking stocks led the decline. On the BSE, 1,911 stocks fell against 2,356 that rose, and 137 touched 52-week lows, a sign of stress beyond the headline indices.

The backdrop is unforgiving. Brent crude held near $103 a barrel, keeping inflation fears alive. Foreign institutional investors kept selling Indian equities, while U.S. Treasury yields sat near multi-decade highs. WazirX founder Nischal Shetty told BusinessLine that elevated inflation expectations and high yields keep borrowing expensive and may restrict institutional flows into risk assets.

There were pockets of buying. Bajaj Auto rose 2.86 percent to 10,058 rupees, Dr. Reddy's Laboratories gained 2.76 percent, and Mahindra & Mahindra added 1.14 percent, as auto and select pharma counters held up.

Why it matters

For ordinary investors, the message is caution. The market snapped an eight-week losing streak only last week, and Monday's reversal shows how fragile the recovery is. With crude above $100 and foreign money still leaving, every rally is being sold.

The rupee offered a small cushion. Traders expect it to strengthen about 1 percent to around 95.60-95.90 per dollar after settling at 96.73 on Friday.

What to watch

Earnings season is the next test. HCL Technologies, ICICI Prudential AMC and RBL Bank report September-quarter results on Monday, and investors will parse management commentary for clues on demand and margins. On the macro calendar, all eyes are on Wednesday's U.S. inflation data, with headline CPI expected near 3.7 percent. A hotter print would pressure risk assets globally; a softer one could fuel the rebound.

Key numbers

• 547.65: points lost by the Sensex (0.76%), closing at 71,924.68
• 157.10: points lost by the Nifty (0.70%), closing at 22,363.35
• 102.9: Brent crude futures, dollars per barrel
• 19%: the market-implied probability of an October Fed rate hike, down sharply