The benchmark Nifty 50 fell 1.5 per cent, or 360 points, to close at 23,816, while the BSE Sensex dropped 1.7 per cent, or 1,313 points, to end at 76,015. The decline marked the indices’ steepest single-day fall since March 30 and wiped out Rs 6.2 trillion in investor wealth.
The rupee also came under sharp pressure, ending at a record closing low of 95.31 against the US dollar after declining 0.9 per cent — its biggest single-day fall since March 27.
Analysts said the market was reacting to fears of persistently high oil prices and their impact on India’s inflation, current account deficit and fiscal position.
Travel and jewellery stocks were among the worst hit after Modi urged restraint in fuel consumption, imports and gold purchases to ease pressure on foreign exchange reserves strained by high energy prices. Shares of InterGlobe Aviation (IndiGo) and Titan Company emerged as the top laggards on the Sensex and Nifty.
Broader markets were relatively resilient. The Nifty Smallcap 100 and Nifty Midcap 100 indices declined a little over 1 per cent each. The India VIX, a measure of market volatility, rose 10 per cent to 18.6.
On Monday, foreign portfolio investors (FPIs) pulled out Rs 8,438 crore from domestic equities, the most since April 24. Meanwhile, domestic institutional investors (DIIs) injected Rs 5,940 crore. So far this year, FPIs have pulled out over Rs 2.1 trillion from the Indian markets.
“In the near term, markets are expected to respond primarily to external cues — most notably swings in crude oil prices, evolving geopolitical developments, and shifts in global capital flows,” Axis Mutual Fund said in a note. The fund house added that sectors such as aviation, logistics and transportation face immediate cost pressures from elevated fuel prices, while consumer-facing companies could be hit through higher inflation.
Puneet Singhania, director at Master Capital Services, said India was more vulnerable to the oil shock than some other Asian markets benefiting from the artificial intelligence and semiconductor boom.
“More than 85 per cent of India’s crude requirement is imported and with Brent above the $100 mark, the second-order effects on inflation and the current account are unfavourable,” he said. “Rupee depreciation also remains a key overhang for attracting global investors as it effectively erodes gains even when underlying equities perform.”
Market breadth remained weak, with 3,000 stocks declining against 1,358 advancing on the BSE.
Analysts said the trajectory of crude oil prices and developments around Trump’s proposed visit to China later this week would be key triggers for the market in the near term.