Stock Market Down Today: Indian equity benchmarks extended their losses on Friday, with both the Sensex and Nifty slipping 1 per cent amid rising geopolitical tensions, soaring crude oil prices, a weaker rupee, weak global cues, and expectations of a US Federal Reserve rate hike.
Stock market on July 24As of 11:30 am, the BSE Sensex was down 718 points (0.9 per cent) at 75,673.69. Earlier in the session, the index touched an intraday low of 75,474.43, marking a decline of around 1.2 per cent from its previous close of 76,391.39. (BSE Today)
Five factors behind today’s market decline
Escalating Iran-US Conflict
Investor sentiment remained under pressure after reports that the United States carried out military strikes on Iran for the 13th consecutive night. The developments followed US President Donald Trump’s warning of more intense attacks, fueling concerns of a wider regional conflict.
Heightened geopolitical tensions typically increase market volatility as investors shift toward safer assets, weighing on equity markets.
Surge in Crude Oil Prices
Crude oil prices climbed sharply, with Brent crude futures rising above USD 100 per barrel, while WTI crude futures traded near USD 92 per barrel.
Higher oil prices raise inflationary pressures by increasing transportation and production costs. Elevated inflation can hurt corporate earnings, dampen consumer spending, and increase the likelihood of tighter monetary policy—all of which are negative for equities.
The Indian rupee opened weaker at 96.63 against the US dollar, compared with the previous close of 96.5725. By 11:40 am, the rupee had slipped further to 96.665, down around 0.1 per cent.
A weaker rupee increases import costs, particularly for crude oil, which can widen the trade deficit and add to inflationary pressures. It may also discourage foreign investment, putting additional pressure on domestic equities.
Weakness Across Asian Markets
Asian markets traded sharply lower, further dampening investor sentiment.
- South Korea’s KOSPI plunged nearly 6 per cent, falling 419.21 points to 6,680.11.
- Japan’s Nikkei 225 declined around 3 per cent to 64,450.50.
- Hong Kong’s Hang Seng Index slipped about 1.5 per cent, losing 376.81 points to 24,844.
Weakness across regional markets often spills over into Indian equities as investors adopt a risk-off approach.
Rising expectations of a Fed rate hike
The spike in crude oil prices has strengthened concerns about persistent inflation, leading markets to expect a more hawkish stance from the US Federal Reserve.
According to CME’s FedWatch Tool, traders are pricing in an 82 per cent probability that the Fed will raise interest rates at its September policy meeting.
Higher US interest rates typically strengthen the dollar, trigger capital outflows from emerging markets, and weigh on equity valuations, including those in India.
(Disclaimer: The above article is meant for informational purposes only and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
