The Sensex has faced a significant decline, falling by 500 points as investor sentiment weakens. Initially, the benchmark indices opened positively, with the Sensex rising over 400 points. However, the situation reversed dramatically as selling pressure increased, leading to a drop of nearly 1,100 points from the day’s high.

As of 12.02 pm, the BSE Sensex was recorded at 72,651.10, down 598.29 points, or 0.82%. The index had opened at 73,665.64 and reached an intraday high of 73,766.51 before the downturn commenced. This decline places the index approximately 1,115 points below its peak for the day.

Meanwhile, the NSE Nifty 50 also experienced a downturn, falling by 248 points, or 1.09%, to settle at 22,439.65 after reaching a high of 22,787.25 earlier in the session. The market’s decline is attributed to rising crude oil prices and broad-based selling.

Impact of Rising Crude Oil Prices

The surge in crude oil prices has emerged as a critical concern for the Indian economy. Brent crude futures increased by 1.21%, reaching $114.54 per barrel, while US West Texas Intermediate crude rose by 1.40% to $100.86. Given that India imports a significant portion of its crude oil, elevated prices may lead to an increased import bill, further fuelling inflation and squeezing corporate profit margins.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, highlighted that the rising crude prices are a substantial negative factor for both the economy and the stock market. However, he noted that other elements, such as declining US bond yields, a stronger rupee, and the anticipated return of funds from the Jio Platforms IPO, could provide some support to equities.

Despite these concerns, the market has seen widespread selling across various sectors, particularly in metal, real estate, and consumer durable stocks. The Nifty Metal index fell by 3.39%, while the Nifty Realty index declined by 3.16%. The Nifty Consumer Durables index dropped by 3.37%, and the Nifty Chemicals index experienced a decrease of 2.85%.

Investor Interest in Jio Platforms IPO

Despite the overall market downturn, investor interest in the Jio Platforms IPO remains robust. The IPO, valued at Rs 30,213 crore and backed by billionaire Mukesh Ambani, was reportedly subscribed 6.98 times by 12.04 pm on Friday, marking the third and final day of bidding.

The retail portion of the IPO was subscribed 2.08 times, while the qualified institutional buyer category saw a subscription rate of 14.60 times, and the non-institutional investor segment was subscribed 9.52 times. This strong demand is being closely monitored as a barometer of investor appetite for large listings, especially amid scrutiny of global technology valuations.

Although the strong demand for the IPO has not mitigated the broader sell-off in equities, it is anticipated that more than Rs 3 lakh crore invested in the IPO could return to the market after allotment is completed by next Monday. This influx of liquidity may provide a boost to the market in the upcoming week.

Vijayakumar indicated that any potential recovery would likely be led by large-cap stocks, which have shown resilience. However, the correction in the broader market, particularly among small-cap stocks, may persist due to valuations driven more by liquidity than by underlying fundamentals.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store – https://apps.apple.com/in/app/newspin/id6746449540

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share