Nifty hits 52-week low as crude, FII selling weigh

The Nifty and Sensex both registered fresh 52-week lows on Thursday, as Indian equities faced broad-based selling pressure. The index fell 1.64% to 22,231.80, while the Sensex declined 1.44% or 1,045.46 points to 71,593.24. Sandip Jha, Godrej Wealth's Chief Product Officer, attributed the market's woes to crude prices surpassing $100 a barrel, persistent foreign institutional investor (FII) selling, a hawkish Reserve Bank of India (RBI), rising US bond yields, and a weakening rupee.

The Nifty opened at 22,599.05 but fell through the session to a low of 22,179.90, breaking its April 2022 low of 22,182.55. Nandish Shah of HDFC Securities noted that the Nifty had corrected more than 10% from its early-August high of 24,774 and was nearly 16% below its all-time high of 26,373. Selling was widespread across all sectors, with metal, real estate, media, auto, energy, and FMCG stocks leading the decline.

The Nifty Midcap 100 and Nifty Smallcap 100 both fell by 2.53% and 2.34% respectively. The rupee closed at 96.78 against the US dollar, marking an all-time low for the session. Brent crude oil surged above $104 a barrel, while the 10-year Indian government bond yield climbed to a two-year high of around 7.2%. The US 10-year Treasury yield remained at 5.3%.

The RBI's recent 25-basis-point rate hike and its shift towards a calibrated tightening stance added to concerns over financial conditions, with RBI deputy governor Shrikant Chouhan stating that the hike failed to provide comfort and that foreign investors were moving towards dollar assets due to global risk aversion. Pabitro Mukherjee of Bajaj Broking added that the Nifty had moved below the 200-week Exponential Moving Average (EMA) at 22,379, with a potential pullback facing resistance at 22,400-22,600.

He warned that a follow-through decline could push the index towards the 22,000 level. Despite the global and domestic macro factors, earnings are expected to provide a key domestic trigger, with the current earnings season likely to be the only credible near-term catalyst. Siddhartha Khemka of Motilal Oswal Financial Services expects aggregate earnings for the firm's universe of about 400 companies to grow by 22% year-on-year in the second quarter of FY27, with Nifty-50 earnings projected to increase by 27%.