Bears wrest control in last hour: What triggered downside of over 600 points within 45 minutes on Sensex today

Bears wrest control in last hour: What triggered downside of over 600 points within 45 minutes on Sensex today

• Sensex fell over 600 points in 45 minutes after Qatar's warning
• Oil prices may surge if Middle East conflict disrupts supplies
• Nifty and Sensex had their steepest weekly decline since 2024

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A day after Sensex rose 900 points in 20 minutes, a movement on the opposite side was seen on March 6 where Sensex fell over 600 points within 45 minutes.

The mini flash crash happened after a Financial Times report quoted natural gas producer Qatar saying that even if the Middle East war ended immediately, it would take "weeks to months" to return to a normal cycle of deliveries.

Global oil prices could surge to as high as $150 a barrel if the conflict in the Middle East intensifies and disrupts energy supplies from the Gulf, Qatar's energy minister Saad al-Kaabi told the Financial Times, warning that such a scenario could severely damage the global economy.

Kaabi said the conflict could force energy producers across the Gulf region to declare force majeure and suspend deliveries if hostilities continue.

“Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure,” Kaabi told the Financial Times. “If they don’t, they are at some point going to pay the liability for that legally, and that’s their choice.”

"The warning from Qatar's energy minister that a prolonged conflict could bring down economies around the world has again rattled financial markets," Susannah Streeter, chief investment strategist at Wealth Club told Reuters.

The US-Israel air campaign against Iran was nearing a week with no end in sight. Oil prices have surged the most this week since Russia's 2022 invasion of Ukraine as shipping through the strategic Strait of Hormuz ground to a halt.

At 2:25 pm on March 6, Sensex was trading at 79,439 and by 3:15 pm the benchmark index was trading at 78,812, representing a decline of 0.76%.

On March 6, Sensex closed 1,097.00 points or 1.37% at 78,918.90, and the Nifty was down 315.45 points or 1.27% at 24,450.45. About 1,810 shares advanced, 2,225 shares declined, and 164 shares were unchanged. Most of the fall happened during the last hour and Bank Nifty also fell over 2% with ICICI Bank, HDFC Bank leading the losses. India VIX also surged 11%, which implies markets are still not out of the woods.

For the week, the Nifty and Sensex lost about 2.9% each, marking their steepest weekly decline since February 28, 2025 and December 20, 2024, respectively.

The market is taking into account the near-term threat from oil prices, said Pankaj Pandey, head of retail research at ICICI Securities.

"However, we don't yet see a macroeconomic impact from this as the broad expectation is that crude prices will not remain elevated for a long period."

The rupee ended a tad lower on Friday and logged its worst weekly fall in over a month.

Fifteen of 16 major sectors fell this week, while small-caps and mid-caps declined 2.5% and 2.9%, respectively.

State-owned banks lost 6.5% on fears that higher crude could lift government borrowing costs, push bond yields up and compress treasury gains.

Financials and banks fell about 4.5% each.

Among other stocks, Larsen and Toubro slipped 2.2%. It fell at 7.7% for the week, its worst since May 2020, as investors priced in Middle East exposure.

Interglobe Aviation fell 2.4% on Friday and 8.8% on the week, the worst in three months, on worries that higher fuel costs and moderation in international air traffic could dent quarterly earnings.