Indian equity markets witnessed heavy selling pressure on Monday, dragging benchmark indices lower by more than 1 percent.
The Sensex fell over 650 points to slip below 73,600, while the Nifty dropped more than 200 points and breached the 23,150 mark. The sell-off erased over Rs 5 lakh crore in investor wealth as market capitalisation of BSE-listed companies declined sharply.
Most sectors traded in the red, with auto, IT, banking, metal and realty stocks among the biggest losers.
Global Market Rout Impacts Sentiment
The biggest trigger came from weak global markets.
Asian markets witnessed sharp declines after a major fall on Wall Street last Friday. South Korea’s Kospi plunged nearly 9 percent, while Japan’s Nikkei dropped around 4 percent. Markets in Hong Kong and China also traded lower.
Investors were rattled after the US Nasdaq recorded its biggest single-day decline in more than a year, raising concerns about global growth and technology stocks.
Strong US Data Raises Rate Fears
A stronger-than-expected US jobs report added to market worries.
The US economy added 1.72 lakh jobs in May, much higher than estimates. While this reflects economic strength, it also raises fears that the US Federal Reserve may delay interest rate cuts or even consider further tightening if inflation remains elevated.
Higher US rates generally reduce foreign investment flows into emerging markets like India.
FIIs Continue Heavy Selling
Foreign Institutional Investors (FIIs) remained net sellers for the sixth straight session.
On Friday alone, FIIs sold shares worth more than Rs 8,700 crore. Continuous foreign fund outflows have weakened market sentiment and increased volatility.
Crude Oil, Rupee Add To Concerns
Fresh tensions in the Middle East pushed crude oil prices sharply higher.
Brent crude climbed close to $97 per barrel amid fears of supply disruptions through the Strait of Hormuz. Rising oil prices are a major concern for India, which imports most of its energy needs.
At the same time, the rupee weakened against the US dollar, adding pressure on investor sentiment.
Bond Yields Rise
US bond yields also moved higher as investors reassessed inflation risks.
Higher bond yields make fixed-income investments more attractive and often reduce appetite for equities, leading to additional pressure on stock markets.
Investors remain cautious as global uncertainties, geopolitical tensions and rising oil prices continue to cloud market outlook.