Sensex plunges 850 points: 7 key reasons behind $60 billion market rout
Oil prices and global tensions hammer Indian stock markets.
1Behind the sharp decline
The Sensex index extended losses for the fifth consecutive session, dropping over 850 points. Oil prices above $100 per barrel, FII selling, and global tensions negatively impacted market sentiment. Total market capitalization eroded by ₹5 trillion.
2Iran-US tension impact
Houthi attacks on Saudi oil tankers in the Red Sea escalated regional tensions. Risks of Bab-el-Mandeb strait closure raised concerns about global oil supply, pushing Brent crude above $100. Geopolitical risks are weighing on investor confidence.
3Oil price shockwaves
Oil prices surged above $100 for the first time since May following the attacks. Goldman Sachs warned Brent could reach $120 if Hormuz disruptions persist. Rising energy costs are pressuring India's current account balance and currency stability.
4Foreign investor exodus
Foreign institutional investors (FIIs) net sold ₹2,999 crore worth of equities on Thursday. Sustained selling since mid-July is draining market liquidity. The rupee's depreciation against the dollar is further triggering foreign outflows.
5Global market ripple effects
Asian markets saw broad declines, with South Korea's Kospi plunging 6%. Japan's Nikkei fell 3% while Taiwan's index dropped over 2%. Rising Fed rate hike expectations are dampening global risk appetite across equity markets.
6What lies ahead
Analysts expect continued volatility due to oil prices and geopolitical tensions. The rupee risks testing 96.90 levels while rising US Treasury yields pressure global equities. No near-term recovery signals are visible amid these macroeconomic headwinds.
Original article: Economic Times — Sensex 850 puan düştü: 5 trilyon rupilik çöküşün 7 nedeni