Sensex, Nifty plunge over 1%; investors lose Rs 6 lakh crore as Brent crude crosses $107

Indian equity benchmarks came under heavy selling pressure on Monday as rising crude oil prices amid the West Asia crisis, elevated global bond yields and persistent foreign fund outflows weighed on investor sentiment.

The 30-share BSE Sensex pack tumbled 1,011.37 points or 1.37 per cent to 72,884.37, while the NSE Nifty50 index declined 318.65 points or 1.38 per cent to 22,821.85.

Brent crude oil prices rose more than 3 per cent after US President Donald Trump rejected Iran's latest peace proposal. Brent crude was trading at $107.53 per barrel at the last check.

The sell-off extended to the broader market, with Nifty Midcap100 sliding 1.35 per cent and Nifty Smallcap100 cracking 1.41 per cent. India VIX, a measure of expected volatility in the equity market, jumped 15.09 per cent to 14.

The combined market capitalisation (m-cap) of BSE-listed companies fell to Rs 475.85 lakh crore from Rs 481.88 lakh crore in the previous session. This translates into a decline of around Rs 6 lakh crore in Monday's session.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the current market weakness reflected external pressures outweighing domestic factors.

"Two apparently contradictory trends - in the economy and markets- deserve attention. The economy is resilient and corporate earnings are improving, but the market is steadily going down. This is a case of external headwinds overpowering domestic tailwinds. Brent crude rising and the US 10-year yield at 5.2 per cent are strong headwinds that are weighing on markets. FPIs, after turning buyers in July and August have again turned sellers in September. This scenario will keep the market under pressure in the near-term," Vijayakumar said.

He added that while FPIs have been selling large-cap stocks, they have continued to buy mid- and small-cap stocks despite their elevated valuations.

"From the market perspective an important trend is that even though FPIs are sellers in large-caps, they continue to buy mid-and small-caps despite their elevated valuations. The broader market is where the momentum is. This is likely to be a short-term phase. The valuation differential between large-caps on one side and mid-and small-caps on the other, will not last long. A reversion to mean is inevitable. This will happen only when crude and US bond yields cool," he said.

Global bond yields remained elevated. The US 30-year Treasury yield rose to 5.53 per cent, its highest level since 2004.

Nifty, Sensex levels to watch

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said the Nifty has immediate support at 22,800, followed by 22,600, while the corresponding support levels for Sensex are 73,200 and 72,500.

"A sustained move above 23,300 on Nifty would be positive and could trigger a recovery towards 23,600. Similarly, a move above 74,500 on the Sensex could support an upward move towards 75,500. The recommended strategy would be to accumulate select stocks in the 22,800–22,600 range on the Nifty and 73,200–72,500 range on the Sensex, while using any recovery towards 23,200–23,300 and 74,200–74,500 to reduce weak long positions," Chouhan said.