Summary:
The Indian stock market fell nearly 1% on September 9, with the Sensex dropping over 650 points and Nifty 50 declining to 23,467. Rising crude oil prices, US-Iran tensions and IPO-driven liquidity pressures weighed on investor sentiment.
The Indian stock market remained under pressure on Wednesday, 9 September, as global cues and concerns around domestic liquidity led to renewed selling. The Sensex fell more than 650 points to an intraday low of 74,923, nearly 1%, whereas the Nifty 50 gave up nearly 1% to 23,467. The Sensex and Nifty have each fallen nearly 2% over the last three trading sessions.
The selling pressure was wide as major stocks played a key role. On the Sensex, Infosys, HDFC Bank, ICICI Bank, TCS and Reliance Industries fell the most Whereas on the Nifty 50 index, Infosys, HDFC Bank, ICICI Bank, Bharti Airtel and Reliance Industries were the major drags.
Crude Oil Near $100 Concerns Inflation
The main concern for investors is the sharp rise in crude oil prices. Brent crude is near $100 barrel as geopolitical tensions continue to simmer. Higher oil prices are worrying about inflation, interest rates and India’s economic outlook.
India imports nearly 85% of crude oil requirements, which makes it highly susceptible to a rise in global energy prices. Higher-priced crude can eat up the country’s import bill, hurt the rupee, and weigh on corporate profitability.
The Indian rupee opened weaker on Wednesday, down 5 paise to 94.87 against the US dollar, adding on to the market concerns.
Us-Iran Tensions Keep Global Markets Nervous
Escalating tensions between the US and Iran have further added to the uncertainty across global markets. The conflict that has been brewing for more than six months has raised fears over disruption of oil supplies.
Recent developments, including strikes on Iranian oil infrastructure, have led investors to believe that crude prices may stay high for a longer period of time. A prolonged geopolitical crisis can hurt global growth and inflation while delaying monetary easing.
IPO boom diverts liquidity from secondary markets
Along with global concerns, the strong IPO pipeline is also impacting the market sentiments. A sizeable number of new issues are attracting funds, draining liquidity from the stocks.
The BSE has had 146 IPOs launched so far during the year, resulting in strong retail and institutional participation. With rising listing gains, investors are moving towards the primary market. Since June, the average IPO listing gains have risen to around 22% while the Nifty 50 has recorded a negative return of about 9.5% on a year-to-date basis.
Such a shift in preference has placed pressure on the secondary market with the buying support being sustained.
Market Outlook Remains Cautious Amidst Multiple Headwinds
The combination of higher crude prices, geopolitical concerns and liquidity flow into IPOs has kept investors cautious. Strong participation in new listings reflects on-going retail interest in the stock market, however, the movement of the major indices in the near term will depend on oil prices, global risk appetite and institutional flows.
For now, investors are focusing on how geopolitical tensions will ease and how oil prices will move lower.
