Indian equity benchmarks, Sensex and Nifty closed over 2 percent lower on October 3 as a wave of broad-based selling swept the markets, driven by escalating Middle East tensions, SEBI's tightening grip on F&O trading, and a surging Chinese market luring away foreign investors.
At closed, the Sensex was down 1,769 points or 2.1 percent at 82,497 and the Nifty was down 530 points at 25,267. About 1,077 shares advanced, 2,737 shares declined, and 86 shares remained unchanged. BSE-listed companies lost over Rs 11 lakh crore in investor wealth.
All 13 sectoral indices sank into the red, with Nifty Bank, Energy, and Auto leading the plunge, each dropping 2-3 percent.The Nifty Metal index snapped an eight-session winning streak and fell 0.7 percent.
Broader markets mirrored the decline, with the BSE Midcap and Smallcap indices shedding 2.3 percent and 1.8 percent, respectively. Meanwhile, volatility surged, with the India VIX, the market's fear gauge, spiking nearly 10 percent to 13.2, signalling heightened market anxiety.
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Nifty Bank extended its losing streak to a fourth session, weighed down by a 2-4 percent drop in heavyweights HDFC Bank, ICICI Bank, and Axis Bank. The auto index also slumped, led by losses in Tata Motors, Maruti Suzuki, and Bajaj Auto. Tata Motors shares tumbled nearly 4 percent as its September sales plunged to 69,694 units from 82,023 units in the same month last year.
The Middle East conflict escalated after Iran launched ballistic missiles at Israel, triggering fears of a potential retaliation. "Speculation is growing that Israel may retaliate by targeting major oil fields in Iran, which could further fuel the rise in oil prices," said Vishnu Kant Upadhyay, AVP, Research & Advisory at Master Capital Services. The potential disruption of oil supplies has raised concerns, particularly for oil-importing countries like India, which may face further inflationary pressures.
Crude-sensitive stocks—paint, tyre, and OMCs—took a sharp hit as oil prices approached $75 per barrel. Shares of Kansai Nerolac, Berger Paints, and Asian Paints plunged 3-4 percent, while tyre makers like CEAT, JK Tyres, Balkrishna Industries, and Apollo Tyres saw declines of 3-5 percent. Shares of OMCs including BPCL, HPCL, and Indian Oil fell 4-6 percent.
Adding to the market jitters, new rules introduced by the Securities and Exchange Board of India (SEBI) for the F&O segment have raised concerns about lower trading volumes. With the increase in contract size and limits on weekly expiries, retail participation is expected to shrink, affecting overall market liquidity.
Also Read | Tata Motors shares tumble as September sales slip 15%; stock down 12% in a month
Foreign investors, too, have been drawn away from Indian equities, finding better value in the Chinese market after the People's Bank of China (PBoC) announced a stimulus package for its struggling economy. With attractive valuations in China, foreign institutional investors (FIIs) have redirected funds, adding to the pressure on Indian stocks.
Despite these challenges, analysts believe the Indian markets may not experience prolonged losses.
Rupak De, Senior Technical Analyst at LKP Securities said that the immediate support for Nifty 50 is at 25,070. "A breach of this level could see the index decline towards 24,800," he said. He expects Nifty 50 to face resistance at the 25,500–25,550 range.
Tata Motors, Axis Bank, L&T, Shriram Finance, and BPCL were the top losers on Nifty 50, dropping 4-5 percent. Meanwhile, JSW Steel gained over 1 percent, standing as the index's only gainer.
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