Nearly ₹8.5 lakh crore was wiped out from the market capitalisation of BSE-listed companies as the Nifty slipped below 22,300 and large-cap stocks came under heavy selling pressure.
BY PC Bureau
Mumbai, October 8: Indian equities tumbled on Thursday, with the Sensex plunging more than 900 points and the Nifty falling below 22,300 as foreign investors continued to dump Indian stocks following the RBI’s first rate hike in nearly four years. Rising US bond yields and crude oil prices added to the pressure.
The sell-off wiped out nearly ₹8.5 lakh crore in market capitalisation of BSE-listed companies. By 12:37 pm, the Nifty 50 was down 310.85 points, or 1.38%, at 22,371.70, while the Sensex had fallen 873.82 points, or 1.20%, to 71,764.88.
ITC, Adani Ports, IndiGo, Power Grid and Reliance Industries were among the biggest losers on the Sensex, falling as much as 4%. Titan and major IT stocks, including Tech Mahindra, HCL Technologies, TCS and Infosys, gained up to 2%, providing limited support.
RBI turns hawkish
The RBI’s decision to raise the repo rate and shift its policy stance from “neutral” to “calibrated tightening” has heightened concerns over the outlook for equities. Analysts see the stance change as particularly significant because it signals that further rate hikes remain possible.
Jefferies expects the RBI to raise rates by around 100 basis points during the current tightening cycle, while Nomura described the change in stance as unexpected. It said the move appeared aimed at anchoring inflation expectations and creating a buffer against adverse global conditions.
Geojit Investments Chief Investment Strategist VK Vijayakumar said two more 25-basis-point hikes could put further pressure on equity valuations as fixed-income returns become more attractive.
US bond yields surge
A global bond sell-off has pushed US yields to multi-year highs. The 30-year Treasury yield crossed 5.71%, while the 10-year yield moved above 5.3% and the two-year yield approached 4.9%.
Higher US yields make dollar-denominated fixed-income assets more attractive and can encourage foreign investors to pull money from emerging markets such as India. The resulting pressure is particularly significant for large-cap stocks, which have borne the brunt of recent FII selling.
Oil crosses $102
Brent crude rose another 2% to above $102 a barrel as concerns over Middle East supply intensified. Attacks on shipping around the Gulf and the Strait of Hormuz have raised fears of higher supply risks, freight costs and insurance premiums.
The United Kingdom Maritime Trade Operations agency said a tanker north of Qatar was hit by multiple projectiles on Wednesday, with casualties reported.
US crude inventories fell by 3.2 million barrels last week to 424.1 million barrels, against a 1.7-million-barrel decline forecast by analysts in a Reuters poll.
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FIIs keep selling
Foreign institutional investors have continued to sell Indian equities, with large-cap stocks facing particular pressure. Vijayakumar said the combination of high US bond yields and sustained FII outflows was likely to keep the Nifty’s large-cap segment under pressure.
“With the US 10-year bond yield hovering above 5.3%, FIIs will continue to sell on every rally,” he said, adding that a sustained market reversal would require FIIs to return as buyers.
For investors, the immediate combination is unfavourable: higher domestic interest rates, elevated US yields, expensive oil and persistent foreign selling. Until some of those pressures ease, volatility is likely to remain high.
