Sensex Crashes 300 Points as Oil Prices Soar
Indian equities experienced a sharp reversal on Monday as the benchmark BSE Sensex plummeted by 300 points from its session high due to renewed concerns over global crude oil prices and a weakening rupee.
The Sensex, which had initially climbed 177.81 points or 0.22% to 78,676.98, ultimately fell by 158.62 points to 78,340.55 in afternoon trading. The NSE Nifty 50 also declined 45.20 points to 24,524.95.
The energy sector took center stage as the primary driver of this risk-off sentiment, with Brent crude prices surging 1.03% to $84.41 per barrel for a third consecutive session. The increase in oil prices is attributed to escalating geopolitical uncertainty following Iran's decision not to reopen the Strait of Hormuz and weekend attacks on commercial vessels in the Gulf.
Rajesh Palviya, Head of Research at Axis Direct, noted that 'elevated crude prices remain a key risk.' With India importing over 85% of its crude oil requirements, higher energy costs can widen the nation's current account deficit, fuel inflation, and squeeze corporate margins across various sectors.
The Indian rupee also felt the strain, depreciating by 8 paise to 95.25 against the US dollar due to a stronger greenback and rising crude prices.