Summary of this article
Sensex and Nifty fell for the fourth consecutive session on October 23
Crude oil surge and global market weakness weighed on investor sentiment
Foreign fund outflows and Fed rate concerns added to selling pressure
Equities fell for the fourth consecutive session on Friday, October 23, as crude oil prices surged, foreign investors continued to pull money out of domestic stocks and concerns over US interest rates weighed on sentiment. The benchmark indices recovered a large part of their intraday losses, but selling pressure remained intense in mid-cap and small-cap stocks.
The BSE Sensex slipped 126 points, or 0.17 per cent, to close at 73,124, while the NSE Nifty 50 declined 88 points, or 0.39 per cent, to settle at 22,600. During the session, the Sensex fell more than 700 points to below 72,500, while the Nifty declined over 250 points to below 22,400.
The selloff briefly wiped out more than Rs 12 lakh crore from the combined market capitalisation of BSE-listed companies. By the close, investors had lost around Rs 7.42 lakh crore in market value.
The broader market faced heavier selling than the benchmark indices. The Nifty Smallcap 100 and Nifty Midcap 100 fell 2.94 per cent and 2.21 per cent, respectively, during the session. Selling was widespread across the market, with 3,011 stocks falling on the NSE against 624 gainers, while 89 remained unchanged.
The decline also dragged the market lower for the week, ending a two-week winning streak.
Why Did Stock Market Fell Today
Here are the reasons that dragged stock market today.
1. Crude Oil Surge Over $114
Brent crude oil prices surged over $114 per barrel in the futures market as escalating hostilities between Saudi Arabia and Yemen-based Houthi rebels heightened concerns over disruptions to global energy supplies. The possibility of further military escalation in West Asia added to the uncertainty surrounding oil shipments.
Concerns also grew over the Bab el-Mandeb Strait, a key shipping route connecting the Red Sea with the Gulf of Aden, as the Houthis advanced towards the strategic waterway.
Reports that the US and Israeli militaries had prepared plans for renewed strikes against Iran after the American midterm elections added another source of uncertainty for investors.
US President Donald Trump has warned that he may “go a little further” to ensure Iran never acquires a nuclear weapon. The Wall Street Journal, meanwhile, reported that Iran has threatened to target airports, pipelines and other civilian infrastructure in neighbouring West Asian countries, as well as US military bases, if Washington and Israel resume strikes on Iranian territory.
A sustained rise in crude oil prices presents a significant challenge because India relies heavily on imported oil. Higher prices can increase the import bill, put pressure on the rupee and raise the cost of fuel and transportation. This could complicate the inflation outlook and weigh on corporate margins, particularly for companies that cannot fully pass on higher input costs.
The prospect of higher inflation also makes it harder for central banks to ease monetary policy, adding to the pressure on equity valuations.
2. Weakness In Global Markets
Global markets came under pressure, with South Korean stocks falling sharply on Friday after a steep overnight decline in US technology shares.
On Wall Street, the Nasdaq Composite fell 2.60 per cent to close at 26,008.86 on Thursday, marking its biggest single-day fall since early June. The S&P 500 dropped 1.21 per cent to 7,663.43, while the Dow Jones Industrial Average edged up 0.02 per cent to 52,867.98.
Technology stocks led the decline as investors grew concerned about whether heavy spending on artificial intelligence would deliver enough returns.
3. Continued Foreign Fund Outflows
Foreign institutional investors (FII) have been net sellers in 11 of the 14 trading sessions in October so far. The selling pressure has persisted since September, keeping investors cautious about the near-term direction of domestic equities. So far this month, FII selling has reached Rs 48,056 crore.
Persistent foreign outflows can weigh on large-cap stocks and amplify volatility, particularly when global risk appetite deteriorates. Rising crude oil prices and uncertainty over US interest rates could further influence foreign investors' allocation decisions.
4. Fed Rate Outlook Keeps Investors Cautious
Expectations of US interest rates staying higher for longer added to market pressure as rising crude oil prices raised inflation concerns. Investors are watching the US Federal Reserve’s October 27-28 policy meeting and upcoming Personal Consumption Expenditures (PCE) inflation data.
While traders largely expect the Fed to keep rates unchanged in October, the probability of a rate hike in December has risen to around 80 per cent, according to CME Fed Watch tool. Higher US rates could strengthen the dollar and prompt foreign investors to pull money out of emerging markets. Rate-sensitive sectors such as real estate, metals and PSU banks faced heavy selling on Friday.
What Should Investors Watch Next
The near-term direction of the market will depend on whether crude oil prices remain elevated, foreign investor selling continues and incoming US inflation data reinforces expectations of tighter monetary policy.
