The Indian markets tumbled the most in more than four years, wiping off Rs 7 lakh crore worth of investor wealth.
Domestic equities extended declines, tracking the global selloff after the historical crash in the oil prices triggered by an all-out price war between Saudi Arabia and Russia. That breakdown of talks, aimed at cutting output after coronavirus hurt demand, is likely to have sweeping political and economic consequences.
The S&P BSE Sensex tumbled as much as 6.57 percent and NSE Nifty 50 dropped as much as 6.32 percent. The two indices closed 5.17 percent (1,941.67 points) and 4.9 percent (538 points) lower, respectively. That’s the biggest slide since August 2015 for both the benchmarks. Investor wealth measured by BSE’s market capitalisation fell more than 4.9 percent to Rs 137 lakh crore.
Oil Is Not Well
Brent futures suffered the second-largest decline on record in the opening seconds of trading in Asia, behind only the plunge during the Gulf War in 1991. The global oil benchmark fell as much as 31.48 percent to $31.02 a barrel.
Among the biggest losers on the Sensex—on which energy stocks as about an 11 percent weight—was Mukesh Ambani’s Reliance Industries Ltd. that makes up the bulk of that exposure for the benchmark index because of its refining operations, according to a Bloomberg report.
The oil-to-telecom conglomerate is set for its steepest fall since January 2009 and lost more than Rs 1 lakh crore in market capitalisation. But the global selloff was not the only reason for its more than 25 percent decline from the record high.
Among sectoral indices, Nifty Metal was the worst performer followed by Nifty Media and Nifty PSU Bank.
Nifty Bank Nears Bear Market
The NSE Nifty Bank Index fell nearly 20 percent from its record high, entering the bear market. The index had registered its all-time high of 32,613 clocked on Dec. 30, 2019.
The latest selloff off came after the Reserve Bank of India took over private lender Yes Bank Ltd. and capped withdrawals citing its poor financial health. State Bank of India is looking to invest in the beleaguered domestic peer as part of a rescue plan drafted by the central bank.
RBL Bank Ltd. is the worst performing stock in the Nifty Bank Index, tumbling more than 22 percent. The banking index closed at its lowest level since December 2018.
Foreign Fund Outflows
Overseas investors pulled out Rs 6,595.56 crore from India’s equity market in the biggest single-day outflow since November 2017. Domestic institutional investors, however, remained net buyers with Rs 4,974.8-crore inflows.
Rupee Near All-Time Low
The Indian rupee extended fall against the U.S. dollar. The home currency depreciated as much as 0.55 percent to 74.18 against the greenback. The local legal tender had hit an all-time low of 74.48 on Oct. 11, 2018.
10-Year Yield Drops Below 6%
The 10-year government bond prices rose as it’s considered safer than equities. As a result, the yield on the benchmark bond fell as much as 19 basis points to below 6 percent, the lowest since 2009. A bond’s yield moves inversely to prices.
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