Indian Stock Market Plummets as Sensex Crashes Over 800 Points

Sensex and Nifty Extend Losses for Fourth Consecutive Day Amid Rising Crude Oil Prices and Weakening Rupee

The Indian stock market experienced a considerable downturn on Monday, with the Sensex crashing over 800 points in intraday trade. This marks the fourth consecutive session of losses, driven by rising crude oil prices, a weakening rupee, and substantial foreign capital outflows.

According to The Economic Times, the Sensex opened at 76,629.90, down from its previous close of 77,378.91, and fell to an intraday low of 76,535.24.

Crude Oil Prices Surge to Three-Month Highs

The surge in crude oil prices has been a major factor contributing to the market decline. As reported by Reuters, oil prices hit their highest level in over three months due to expectations that US sanctions will disrupt Russian crude supplies to major importers like China and India.

This increase in oil prices negatively impacts India’s fiscal health, as the country is one of the largest importers of crude oil.

Rupee Hits Lifetime Low Against US Dollar

The Indian rupee also faced significant pressure, crashing 23 paise to hit a lifetime low of 86.27 against the US dollar in early trade on Monday.

The strengthening of the US dollar, coupled with rising crude oil prices, has exacerbated the situation, leading to further depreciation of the rupee.

Foreign Portfolio Investors Continue to Sell Off Indian Equities

Foreign portfolio investors (FPIs) have been offloading Indian equities at a rapid pace. In January alone, FPIs have sold off Indian stocks worth over ₹21,350 crore, following a selloff of ₹16,982 crore in December. This trend of foreign capital outflows has added to the downward pressure on the market.

Market Volatility Ahead of Union Budget 2025

With the Union Budget 2025 approaching, market volatility has increased. Experts are closely watching for government measures that could impact consumption and growth.

According to Mint, if the budget remains populist, it may disappoint the market and lead to further downtrends.

Concerns Over US Federal Reserve Rate Cuts

Hopes for a US Federal Reserve rate cut in 2025 have diminished due to strong US macroeconomic data and concerns over inflation.

The minutes of the last policy meeting indicated that policymakers remain cautious about the trajectory of inflation in the world’s largest economy.

Apprehensions About Q3 Earnings

Following lackluster Q1 and Q2 earnings seasons, experts anticipate only a modest recovery in select sectors for Q3. Significant improvements are expected only by Q4, suggesting that market pressure may persist for an extended period.

Slowing Economic Growth Raises Investor Concerns

The Indian economy is showing signs of weakness, with several global agencies revising their growth forecasts for the current year.

The Ministry of Statistics & Programme Implementation (MoSPI) has projected a GDP growth of 6.4% for the financial year 2024-25, down from 8.2% in the previous year.

Have you been affected by the recent stock market downturn? How are you managing your investments during this period? Share your experiences!