Why Is The Market Falling Today, 5 Factors Behind The 850-Point Sensex Slide And Nifty’s Drop Below 23,150
Mumbai: Indian equities fell on Thursday as rising US bond yields, higher oil prices and a weaker rupee unsettled investors. At 12.33 pm, the Sensex was down more than 850 points near 73,950, while the Nifty 50 had lost over 250 points and traded around 23,150. US bond yields surge The US 10-year Treasury yield rose to about 5.11 percent, its highest since 2007, after data showed American…
Mumbai experienced a substantial decline in Indian equities on Thursday, as rising US bond yields, surging oil prices, and a weakening rupee unsettled investors. By 12:33 pm, the Sensex had dropped over 850 points, hovering around 73,950, while the Nifty 50 had fallen more than 250 points to trade near 23,150.
The surge in US bond yields played a significant role in the market fall. The 10-year Treasury yield reached 5.11 percent, marking its highest level since 2007. This rise came in the wake of data showing American business activity expanding at its fastest pace in over five years. Elevated bond yields can draw funds away from riskier investments like stocks, thereby dampening investor interest in shares.
Fears surrounding Federal Reserve rate hikes also grew after strong US data. Futures traders now estimate a 66 percent probability of an October rate increase, up from 53 percent previously. Higher US interest rates could maintain elevated borrowing costs, negatively impacting emerging markets like India.
Oil prices also climbed above $102 a barrel, buoyed by uncertainty over US-Iran negotiations and the Strait of Hormuz. This rise came after Brent crude had dropped below $99 on Wednesday, reigniting supply concerns. Higher oil prices can increase India's import bill, fuel inflation, and squeeze company margins.
The rupee weakened by 14 paise, closing at 95.87 against the dollar in early trade. The weakening currency was driven by similar factors as oil prices and US bond yields. Higher crude prices, rising US yields, and foreign investor selling kept currency traders cautious. A weaker rupee also makes imports costlier, compounding the factors weighing on the market.
Financial sector stocks led the decline in indices. Bajaj Finance saw a drop of more than 5 percent, while Axis Bank and Bajaj Finserv each fell 3-4 percent. The broader market also suffered, with mid-cap and small-cap indices declining around 1 percent. On the NSE, 2,019 stocks closed lower compared to 679 that rose. Analysts noted that investors will continue to monitor these indicators, as well as the potential easing of selling pressure in financial stocks.
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