Domestic equity markets opened sharply lower on Monday amid a steep rise in crude oil prices and heavy selling across global markets.
The Nifty 50 index opened at 23,868.05, down 582.40 points or 2.38 per cent, while the BSE Sensex opened at 77,056.75, falling 1,862.15 points or 2.36 per cent, reflecting strong selling pressure across sectors.
The decline in domestic equities comes as crude oil prices surged by around 25 per cent to about 116 US dollars per barrel amid the ongoing conflict in Asia, raising concerns over inflation and economic growth.
Market experts said the rise in crude prices could have a major impact on the Indian economy, given the country’s heavy dependence on imported oil.
Banking and market expert Ajay Bagga said that Indian markets are witnessing a sharp correction, as reflected in stock futures represented by Gift Nifty.
He said the spike in oil prices could affect India’s GDP growth, current account deficit and inflation, as the country imports more than 85 per cent of its crude oil requirements.
Bagga added that the rise in oil prices is likely to push up domestic fuel prices.
“We expect retail petrol and diesel prices to rise. Cooking gas prices were already increased last week for both consumers and commercial users. Jet aviation fuel prices will also move higher,” he said.
According to him, several sectors are likely to face pressure due to higher oil prices.
He said sectors such as paints, aviation, automobiles, tyres, chemicals and other industries dependent on oil derivatives could see further declines. He added that the current liquidity squeeze could lead to broad-based selling across the market.
Sectorally, heavy selling was witnessed across several indices on the National Stock Exchange. PSU Bank, Media and Financial Services stocks faced the highest selling pressure.
The Nifty Auto index fell by 2.9 per cent, while the Nifty Media index declined 2.36 per cent. The PSU Bank index dropped 4 per cent, Nifty IT fell 1.29 per cent, Nifty FMCG declined 1.38 per cent, and the Consumer Durables index slipped 2 per cent.
Sunil Gurjar, SEBI-registered analyst and founder of Alphamojo Financial Services, said the Nifty had a weak week and has breached the important 200-day Exponential Moving Average (EMA), which indicates weakness in the trend.
He said the fall was driven by heavy foreign institutional investor (FII) selling, a weakening rupee and global geopolitical tensions, which weighed on market sentiment.
Gurjar added that a sustained breakout above 24,646 could signal bullish momentum, while a breakdown below the current support zone may lead to further downside. He said the next strong support level is around 23,850.
The fall in Indian markets also comes amid sharp declines across other Asian markets.
Japan’s Nikkei 225 index fell by about 7 per cent, while South Korea’s KOSPI index declined 7.43 per cent.
Other Asian markets also traded lower in early hours. Singapore’s Straits Times index dropped 2.65 per cent, Hong Kong’s Hang Seng index declined over 2.46 per cent, and Taiwan’s Weighted Index fell 5.77 per cent.
Meanwhile, US markets had ended last week on a weak note. On Friday, the S&P 500 declined 1.33 per cent, while the Nasdaq fell 1.53 per cent.
-ANI
