Indian stock markets suffered sharp losses today – Tuesday, Sep 17 – amid heavy selling pressure as rising crude oil prices and rupee’s weakening against the US dollar rattled investor sentiment.
The trend was seen elsewhere as well. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.66 while Chinese shares fell 1.07 per cent and Hong Kong shares slumped 1.18 per cent.
In India, The S&P BSE Sensex index slumped as much as 704 points to 36,419.09 at the day’s weakest level, said media reports. The broader NSE Nifty 50 benchmark dropped as much as 207 points to an intraday low of 10,796.50, the fall today wiping out all gains in the year so far and turning the benchmark index negative for 2019.
The fall is being attributed to the September 14 attack on two Saudi Aramco plants at the heart of the kingdom’s oil industry, including the world’s biggest petroleum processing facility. The attack on the two plants — Abqaiq oil processing facility and Khurais oil field — resulted in a temporary shortage of 5.7 million barrels per day which is 5 per cent of the global crude supply, or 50 per cent, of the kingdom’s oil output.
The drone attack hit 5 per cent of world’s oil production. As a result, crude oil prices rose nearly 20 per cent in a day to near $72 a barrel intraday on Monday, though it erased some gains later in the day.
India is particularly vulnerable to oil price fluctuations as it imports more than 85 percent of oil requirement.
The Indian rupee also weakened sharply since the beginning of the week, falling 96 paise in two straight sessions and moving towards Rs 72 against the US dollar amid rising demand for the greenback vis-a-vis other currencies overseas and concerns over soaring crude prices following drone attacks on Saudi Arabia’s oil facilities.
Selling of Indian shares by foreign institutional investors (FIIs) also added to the already weak investor sentiment, they added. Foreign investors have so far this month net sold shares worth Rs. 2,428 crore, according to data compiled by the National Securities Depository.
In fact, according to an Economic Times (ET) report, the exodus from India by foreign investors was at the fastest. “After pouring $45 billion into India’s stock market over the past six years on hopes that Modi would unleash the country’s economic potential, international money managers are now unwinding those wagers at the fastest pace on record. They’ve sold $4.5 billion of Indian shares since June, on course for the biggest quarterly exodus since at least 1999,” the ET report said.
The selling pressure was so intense that only three out of 30 shares in the Sensex basket ended higher, reported NDTV.
In the Nifty 50 basket of shares, 44 stocks ended with losses. For the calendar year 2019, the Nifty turned negative on Tuesday, with a decline of 0.41 per cent.
All the 11 sector gauges compiled by National Stock Exchange ended lower, led by a 3.8 per cent fall in the Nifty Auto index. The Nifty Bank, Nifty PSU Bank, Nifty Financial Services, Metal, Private Bank and Realty indices also plunged between 2-3.5 per cent each.
HDFC, HDFC Bank, ICICI Bank, Axis Bank, Reliance Industries, Tata Consultancy Services and State Bank of India were among the biggest drags on the Sensex. They collectively wiped out over 350 points from the 30-scrip index.
Hero MotoCorp, Axis Bank, Maruti Suzuki, State Bank of India and IndusInd Bank were among the top losers in the Nifty 50 basket of shares.