Global jitters and oil surge drag equities; Sensex sheds over 1,000 points, Nifty slips below 23,000

Indian equities retreated sharply on Friday as a surge in crude oil prices and escalating geopolitical tensions triggered a broad risk-off sentiment across global markets, pulling benchmark indices lower and deepening losses across sectors.

The BSE Sensex declined by over 1,000 points in intraday trade, while the NSE Nifty 50 slipped below the 23,000 mark, reflecting sustained selling pressure through the session. The weakness was not confined to large caps. Midcap and smallcap indices also fell, each losing around 1.5 per cent, signalling a wider retreat by investors.

The selloff comes against the backdrop of rising tensions in West Asia, which have pushed global crude prices past the $100 per barrel mark. For India, a major importer of oil, the implications are immediate and significant. Higher crude prices threaten to widen the current account deficit, stoke inflationary pressures and complicate the monetary policy outlook.

Market participants pointed to the sharp rise in volatility, with the India VIX hovering near multi-year highs, as a sign of nervousness among investors. Foreign institutional investors have continued to pare exposure, adding to the downward pressure on equities and the rupee.

Sectorally, the impact was visible across the board. Oil marketing companies, aviation firms and paint manufacturers faced renewed selling on concerns over input cost pressures. Financial stocks also traded weak, mirroring global caution and sustained outflows.

The current phase of correction appears to be driven more by external factors than domestic fundamentals. While corporate earnings expectations have not seen a material downgrade so far, the direction of the market in the near term is likely to remain tied to movements in crude prices and the evolution of geopolitical risks.

Until there is greater clarity on these fronts, investors may have to contend with heightened volatility and intermittent bouts of sharp declines.