Indian Markets Extend Losses: Sensex Falls 443 Points on FII Selling, Oil Prices

Indian markets extend losses amid FII selling, elevated crude oil prices; Sensex falls 443 points

New Delhi, June 4

The BSE Sensex settled lower by 443.15 points, or 0.60 per cent, at 73,903.02, while the NSE Nifty 50 declined 121 points, or 0.52 per cent, to close at 23,284.60.

Market analysts suggest to remain cautious amid continued foreign institutional investor (FII) selling and concerns over the impact of higher crude oil prices on the domestic economy.

"Indian markets are opening with a gap down as the FPI outflows continue to cloud the outlook," said Ajay Bagga, Banking and Market Expert.

Bagga also highlighted key policy speculations circulating within the trading community.

"There are market rumours that tax treatment for FIIs for bond markets and maybe stock markets too could be made more favourable via an ordinance. This led to a sharp recovery yesterday, it could play out today as well, though there has been no official confirmation of this so far," Bagga said.

Analysing the international macroeconomic landscape, Bagga said, "It's a global down day following through from a small fall in the US markets on the back of strong private payroll numbers, lack of progress on the US Iran peace deal and some profit booking from the AI momentum trade."

At the time of filing, Dow Jones Futures stood at 50,702.49, up marginally by 15.42 points or 0.03 per cent. However, the S&P 500 declined by 56.10 points, or 0.74 per cent, to 7,553.68, while the Nasdaq dropped 239.93 points, or 0.89 per cent, to 26,853.98.

Bagga also highlighted that regional sentiment remained weak across Asia. Asian markets are down this morning.

The Nikkei 225 fell 1,132.13 points, or 1.66 per cent, to 67,270.00, while Hong Kong's Hang Seng declined 406.21 points, or 1.58 per cent, to 25,227.00. Singapore's Straits Times Index also slipped 69.83 points, or 1.36 per cent, to 5,068.41.

On the commodities front, Brent crude continued to hover near the high-USD 90 per barrel range, a development closely tracked by investors given its implications for the Indian economy.

Commenting on the energy market, Bagga said, "Oil is steady as a fragile ceasefire between Israel and Hezbollah, holds out hope of a US Iran deal."

At the time of filing this report, Brent Crude traded at USD 97.15 per barrel, down USD 0.66 or 0.67 per cent, while WTI crude stood at USD 95.51, down USD 0.51 or 0.53 per cent. Gold, meanwhile, rose USD 26.11, or 0.59 per cent, to USD 4,460.96.

Analysts noted that higher crude prices are negative for India as they put pressure on inflation, widen the fiscal deficit, and exert stress on the rupee due to the country's heavy dependence on imported energy.

Rajesh Palviya, Head of Research at Axis Direct, said the trajectory of crude oil prices remains a key monitorable for domestic markets.

"For domestic markets, crude oil remains the key monitorable. Sustained strength in Brent crude could keep pressure on inflation expectations and India's import bill, while investors also await further clarity on both geopolitical developments and domestic policy triggers," Palviya said.

He added that in the absence of any meaningful positive announcement from either the global geopolitical front or domestic economic developments, market sentiment is likely to remain range-bound and selective.

Palviya explained that the undertone remains cautious as long as the Nifty trades below the crucial 23,500-23,600 resistance zone.

"On the downside, the 23,200-23,150 zone continues to act as an important support area, while a breach could open the door for further weakness towards the 23,000 mark. Until a clear breakout emerges or a positive catalyst revives risk appetite, traders are likely to maintain a stock-specific approach with a cautious bias," he noted.

— ANI