India's Sensex slumps to 32-month low on oil surge, foreign exodus

India’s benchmark Sensex slumped to its lowest in 32 months on Thursday as surging oil prices, rising global bond yields and a weaker rupee heightened inflation concerns, adding to pressure from the central bank’s hawkish rate increase a day earlier.

The Nifty 50 fell 1.64% to 22,231.8, and Sensex shed 1.44% to 71,593.24. This was 50-stock index’s lowest close in 18 months.

The decline came as foreign investors stepped up selling, offloading a net 469.9 billion rupees ($4.86 billion) in nine days and taking year-to-date outflows to a record $30.4 billion.

The benchmark 50-stock index has lost nearly 15% year to date, in contrast to MSCI’s emerging markets index’s 23% jump fuelled by fund flows into AI-linked stocks.

The rout underscores fears that tighter domestic policy, elevated crude prices and relentless foreign selling could prolong the pressure on Indian equities, which have already sharply underperformed global peers this year.

The Nifty 50 and Sensex also slipped back into oversold territory after briefly recovering last week, with their relative strength indexes falling below 30, signalling heavy selling.

All the 16 major sectors fell on Thursday. Small-caps and mid-caps lost 2.3% and 2.5%, respectively.

The three heaviest benchmark stocks, HDFC Bank, ICICI Bank and Reliance Industries fell 1.5%, 0.6% and 2.5%, respectively.

“Markets are currently under pressure from a web of interconnected factors, rising global bond yields on inflation concerns, a weakening rupee and sustained foreign investor outflows, all of which are, at their core, linked to elevated oil prices,” said G Chokkalingam, founder and head of research at Equinomics Research.

Brent crude surged 4% to over $104 a barrel as Gulf shipping attacks and a US hurricane intensified supply concerns.

“Equities face further heat as oil rises incrementally and monsoon deficits, low water storage compound price pressures in the economy,” Chokkalingam said.

Reserve Bank of India raised its benchmark repo rate by 25 basis points to 5.5% on Wednesday and signalled more increases as it aims to tackle the uptick in inflation.

Tata Consultancy Services fell 0.2% ahead of its September-quarter earnings due after market close.

Analysts expect TCS to post an 11.2% year-on-year rise in quarterly revenue and a 14.2% uptick in profit.

Paytm, One Mobikwik and Pine Labs fell 5.2%, 4.5% and 4.4% on reports that the planned October 15 rollout of merchant fees on certain digital-payment transactions could be delayed by a few months.