Brent surge rattles markets

Benchmark equity indices declined by about 0.6% on Thursday, extending their losses for a third consecutive session as Brent crude prices surged to a five-month high of $112.6 per barrel amid renewed escalation in the Middle East conflict.

The Sensex fell 460.30 points, or 0.62%, to close at 73,249.39, while the Nifty lost 123.70 points, or 0.54%, to settle at 22,687.65. Broader market indices underperformed the benchmarks, with the Nifty Midcap 100 and Nifty Smallcap 100 declining 0.87% and 1.14%, respectively.

Over the past three sessions, both the Sensex and the Nifty have declined by nearly 2% each. The Nifty Midcap 100 and Nifty Smallcap 100 have slumped 3.5% and 4.5%, respectively, over the same period.

Amid broad-based selling, investors’ notional wealth eroded by Rs 14 lakh crore over the three sessions to Rs 458.42 lakh crore. Of this, Rs 3.35 lakh crore was wiped out on Thursday alone.

“Inflation concerns took centre stage today as renewed escalation in West Asia sent crude prices sharply higher. The rupee reversed its recent trend, weakening steadily through the session, which weighed on investor sentiment,” said Vinod Nair, head of research at Geojit Investments.

Although the benchmark indices attempted a recovery led by banking stocks, the gains failed to sustain at higher levels. With domestic bond yields climbing back to recent highs, equity valuation premiums came under renewed scrutiny, and selling broadened across almost all sectors, Nair added.

Overall market breadth remained negative, with 2,862 stocks advancing against 1,477 declining on the BSE.

Foreign portfolio investors (FPIs) sold shares worth Rs 3,458.70 crore, while domestic institutional investors (DIIs) bought shares worth Rs 2,891.32 crore, according to provisional data released by the exchanges.

Among sectoral indices, selling remained broad-based, with FMCG, IT and energy stocks emerging as major laggards. The Nifty FMCG index declined 1.41%, weighed down by Nestlé India, which fell more than 2% to emerge as the biggest loser on the Nifty.

“Higher crude prices and concerns over input costs added to sectoral pressure. The Nifty IT index fell 1% amid broad-based selling after the recent run-up and caution ahead of the US Federal Reserve’s October 27–28 policy meeting,” said Siddhartha Khemka, head of research, wealth management, at Motilal Oswal Financial Services.

The Nifty Auto index declined 0.7%, tracking the broader market weakness. Minutes of the Reserve Bank of India’s Monetary Policy Committee meeting held on October 5–7, released on October 21, highlighted concerns over broadening inflationary pressures, Khemka added.

In Asia, South Korea, Hong Kong and Japan were the top losers while Indonesia, Thailand and Malaysia were the only gainers.