Contents
Black Friday: Sensex crashes 1200 pts, Nifty below 22950, five key factors behind market decline
Sensex and Nifty fell over 1% amid global market concerns
Brent crude stays above $100 a barrel after volatile week
Rupee sinks to record low beyond 94/$ amid energy crisis
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Benchmark indices Sensex and Nifty fell over 1.5% each on March 27, tracking global stocks and elevated Brent crude prices, as hopes for a resolution to the Iran war have ebbed. Nifty even gave up the key 23,000 level.
At 11:25 am, the Sensex was down 1,224.07 points or 1.63% at 74,049.38, and the Nifty was down 360.80 points or 1.55% at 22,945.65. About 764 shares advanced, 3060 shares declined, and 112 shares unchanged.
Key factors behind market decline
Profit booking
Profit booking emerged on March 27 after a whopping 3.5% rally in equities over the last two sessions. Fifteen of the 16 major sectors logged losses, and the broader small-caps and mid-caps slid 1.5% each.
Geopolitical concerns
A global equity selloff stretched into a second day as initial optimism over the US delaying its deadline for Iran to reach a deal faded.
US President Donald Trump said he will extend a pause on attacks against Iran’s energy plants into April and that talks with Iran were going “very well,” but an Iranian official said a US proposal for ending the war as “one-sided and unfair.”
US equities slumped nearly 2% on Thursday, the 10-year U.S. Treasury yield climbed past 4.4% and Brent crude jumped almost 6% on mounting concerns that a near-term halt to the Iran war is unlikely.
Asia’s benchmark share index fell 0.8% after Wall Street gauges slid to the lowest level since September on Thursday. Technology stocks declined as South Korea — a poster child for AI investments — slumped 2.7%, with chipmakers Samsung Electronics Co. and SK Hynix Inc. leading losses. Taiwanese shares dropped 1.4%.
US equity-index futures also pared gains to 0.3% after the Wall Street Journal reported the Pentagon is looking at sending up to 10,000 additional ground troops to the Middle East.
Crude above $100 per barrel
Oil prices fell in early trade on Friday but were still above $100 per barrel and were down over a volatile week after U.S. President Donald Trump said talks with Iran to end the war were going “very well” and announced he would pause attacks on the country’s energy plants for 10 days.
Brent fell 1.7% to about $106 a barrel, after Trump’s 10-day extension.
On Thursday, Brent rose 5.7% while WTI gained 4.6% on fears of further escalation of the war, although trading volume for the front-month Brent contract was the lowest since February 27, the day before the United States and Israel began strikes on Iran.
However, Brent is headed for its first weekly fall in six weeks while WTI has fallen for a second consecutive week, with Trump talking up the prospect of ending the war.
“The Indian economy is strong enough to absorb the shock if the war ends, crude cools down and gas availability becomes normal. But if the war prolongs, crude remains elevated for months together, and gas availability constraints continue, the stress on India’s macros will be significant and the market will discount that. In brief, everything boils down to how long the war will last. The market hope is that since a prolonged war is in nobody’s interests, it may end soon. The US itself is now looking for an exit strategy. Market corrections and rising retail price of petroleum products may exert pressure on the US regime to cool down the conflict” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
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Weak rupee
The Indian rupee hit a record low past the 94-per-dollar mark on Friday, hammered by worries that the energy supply crisis sparked by the Middle East war will drag on, deepening the pressure on energy importing economies.
The rupee fell to 94.44 per dollar, eclipsing its previous all-time low of 93.98 hit earlier this week. It has declined about 4% since the war began late last month.
Despite a 3.5% rally in equities over the last two sessions, foreign investors were net sellers on both days, tempering any positive spillover for the rupee.
“This sustained crude risk is directly impacting India’s import bill expectations, keeping the rupee under pressure. The broader bias remains weak unless energy supply normalizes meaningfully. Near-term range for rupee is seen between 93.70–94.50,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
VIX rises 7.5%
India VIX, the volatility gauge, was trading 7.5% higher at 26.53, which indicates Street expects near-term selling pressure.