Indian Stocks Slide to Near 3-Year Lows

Indian equities slumped for a second session to 32-month lows on Thursday, tracking negative momentum in global stock markets amid a surge in energy costs that reignited the rally in bond yields. The S&P/BSE Sensex fell 1.4% to 71,593 and the NSE Nifty 50 lost 1.6% to 22,232. Oil and fuel prices surged on reports that the Pentagon could be planning strikes against Iran, threatening recent progress in tanker transit across the Middle East. The increase in inflation risks lifted Indian yields after the RBI hiked its policy rate yesterday for the first time in three years, hampering credit activity. High energy prices also pressured the rupee amid capital outflows, which commonly drive foreign investors to divest from rupee-denominated stocks. Industrials and power-hungry manufacturers fell sharply, with Tata Motors, Adani Ports, Power Grid, ITC, and Tata Steel sinking between 2.5% and 4%.

The SENSEX Index dropped 1045 points or 1.44 percent on Thursday to close at 71593 points. Losses were led by ITC (-3.84%), Tata Motors (-3.18%) and Adani Ports (-2.98%).

India’s BSE Sensex fell about 0.5% to 72,294 on Thursday, extending losses from the last session as investors weighed the Reserve Bank of India’s surprise rate hike and a renewed rise in oil prices. The RBI raised its repo rate by 25 bps to 5.5% on Wednesday, its first hike in nearly four years, adopting a more hawkish stance and raising concerns over growth. Adding to pressure on Indian equities, Brent crude climbed above $100 a barrel, heightening concerns over inflation and the country’s import bill, while the rupee also weakened 0.4% to 96.775 per dollar, near its record low of 96.96. Meanwhile, all sectors declined except information technology stocks, which bucked the broader decline, with the IT index rising about 1.2%, led by TCS (+2.4%) ahead of its September-quarter results, due later on Thursday and set to mark the start of the earnings season for major Indian companies. Notable laggards were One 97 Communications (-5.8%), ITC (-2.3%), and Reliance (-1.3%).