Indian benchmark indices extended sharp losses during mid-day trade on Thursday, dragged down by escalating energy costs and tightening monetary policy signals from the Reserve Bank of India. The BSE Sensex slumped 984.64 points, or 1.36 per cent, to trade at 71,654.06, while the broader Nifty50 dropped 344.35 points, or 1.52 per cent, to 22,261.05 as of 1:00 PM IST.
The widespread sell-off wiped out nearly Rs 9 lakh crore from the total market capitalisation of BSE-listed firms, dragging the total value below Rs 462 lakh crore. Market breadth heavily favoured the bears, with 2,645 declines against 693 advances on the National Stock Exchange. The Nifty India Volatility Index jumped 6.5 per cent to 14.80, underscoring heightened anxiety across domestic trading desks.
The Nifty recorded seven consecutive weekly declines, marking its longest losing streak since 2001.
Energy markets experienced severe upward pressure as Brent crude prices surged nearly 4 per cent to a day high of $104.09 per barrel on the Intercontinental Exchange. Persistent supply disruptions in West Asia, compounded by rising attacks on commercial shipping through the Gulf and the Strait of Hormuz, stoked inflation concerns globally. Simultaneously, global bond yields climbed to multi-year highs, with the US 10-year benchmark note yields hovering above 5.3 per cent and 30-year bond yields exceeding 5.71 per cent.
The soaring fixed-income yields fueled a risk-off environment across emerging markets. Foreign institutional investors continued an aggressive selling streak, net selling equities worth over Rs 6,121 crore in the previous session and extending an outflow trend that saw nine consecutive sessions of net sales totaling nearly Rs 57,000 crore through September and early October. Asian and European indices mirrored the downward trajectory, with South Korea's Kospi plunging over 2 per cent and benchmarks in Japan and Hong Kong dropping more than 1 per cent.
Domestic sentiment was further dampened by the Reserve Bank of India shifting its monetary policy stance from neutral to calibrated tightening during its recent policy review. Market analysts note that the central bank's indication of a potential 100 basis point rate-hiking cycle has elevated fixed-income attractiveness while increasing valuation pressures on growth-oriented equities. Nomura noted that the hawkish stance aimed to anchor inflation expectations against adverse international conditions.
Sectoral indices reflected the broad-based decline, with Nifty Realty leading the losses due to sharp drops in developers such as Aditya Birla Real Estate, Lodha Developers, and The Phoenix Mills. Nifty Metal fell 3 per cent, while Nifty Oil and Gas also faced heavy selling. Conversely, heavyweights in the IT sector bucked the negative trend alongside select names like Titan, gaining up to 2 per cent. Meanwhile, Fino Payments Bank shares surged 17 per cent following a business update reporting an increase in its Current Account and Savings Account base to 1.91 crore.
A large one-day fall in the Sensex can have several simultaneous drivers: energy import costs, interest-rate expectations, global selling and company-specific declines. The number of points lost is less useful on its own than the percentage move, sector breadth and turnover. An RBI decision should be described using its precise policy action instead of assuming every liquidity operation is a rate increase. Investors should resist treating a single session as a forecast. The next sessions' currency movement, crude price and bond yields help test the explanations being offered.
