The pressure on Dalal Street is showing no signs of easing. Indian benchmark indices extended their decline in early trade today as well, with the Sensex sliding around 700 points and the Nifty slipping below the 22,600 mark in the intraday trade.
A combination of rising crude oil prices, higher US bond yields, a weaker rupee and renewed uncertainty around US-Iran developments is weighing on investor sentiment. Higher volatility is adding to the pressure, while several sectors are trading in the red.
What are the key factors driving the latest sell-off? Let’s take a look at what investors are watching –
Crude oil crosses $107
Oil has emerged as one of the biggest concerns for the Indian market. Brent crude futures moved above $107 a barrel, while West Texas Intermediate (WTI) crude climbed above $94.
For India, higher crude prices can increase the country’s import bill and put pressure on inflation and government finances. This is particularly important because India imports a large portion of its crude oil requirement.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments, said, “With Brent crude above $106 and the US 10-year at 5.23%, the global macro construct continues to be unfavourable for equity markets. The emerging macro scenario in the US appears to be one of high growth and high inflation. The massive AI spending is driving growth and better-than-expected growth will keep inflation elevated, warranting one more rate hike by the Fed. This, in turn, is pushing US bond yields higher.”
He further added, “Since higher crude prices have not been passed on to consumers, the fiscal strain on India will be higher in FY27. Therefore, if crude prices remain elevated, the fiscal strain can impact India’s GDP growth and corporate earnings growth for FY27. This concern, too, is weighing on the market.”
US bond yields remain elevated
Another pressure point is the US bond market. The yield on the benchmark 10-year US Treasury note has moved above 5%. The US yield has been elevated for more than a month now and is trading at multi-decade highs. The Fed rate action apprehension is driving the higher upmove in yield. The high US yield typically makes the emerging assets less attractive.
Rupee falls past 96
The Indian rupee has also added to the concerns. The currency slipped past Rs 96 against the US dollar, touching around Rs 96.14.
Uncertainty over US-Iran talks weighs on sentiment
Markets were also tracking developments around a possible US-Iran understanding. However, hopes of a quick resolution have weakened.
US President Donald Trump rejected reports that Washington had offered Iran sanctions relief and the release of frozen Iranian funds in exchange for concessions over its nuclear programme.
India VIX jumps
The India VIX, which measures expected volatility in the equity market, rose around 7% to 14.68.
A rise in the volatility index generally signals greater uncertainty among market participants.
Financial and IT stocks under pressure
Several heavyweight stocks are dragging the benchmark indices lower. Bajaj Finance is down more than 2%, while HCL Technologies, HDFC Bank, Titan, Infosys and M&M are also trading lower in the range of around 1-2%.
Multiple sectors remain in the red
The weakness is not limited to a single part of the market. Auto, financial services, fast-moving consumer goods (FMCG), information technology (IT) and realty stocks are among the sectors facing selling pressure.
With several sectors declining together, the market’s fall is appearing broad-based rather than being driven by just one or two stocks.