Markets suffered their worst single-day fall since June 2024 on Thursday, with the BSE Sensex and the Nifty50 closing 3.3 per cent lower, weighed down by HDFC Bank, spike in crude prices and the hawkish tone adopted by the US Federal Reserve, which kept interest rates unchanged.
The Sensex fell nearly 2500 points and Nifty tumbled over 775 points, with Shriram Finance, Eternal, and HDFC Bank leading the losses. HDFC Bank, which had fallen to a 52-week low of ₹770 in opening trade, recovered to end 5.1 per cent lower.
India VIX
The volatility indicator India VIX surged over 21 per cent to 22.80. The sell-off, triggered by the escalating Israel-Iran conflict that sent Brent crude surging past $114 per barrel, wiped out the gains of the past three sessions in a single day. Disruptions in the Strait of Hormuz — a critical global oil transit corridor — pushed crude prices near four-year highs, rattling energy-import-dependent economies like India. Natural gas prices surged over 6 per cent following reports of damage to key LNG infrastructure.
The US Federal Reserve’s decision to hold benchmark rates steady at 3.50 per cent–3.75 per cent, while signalling a higher inflation outlook due to rising energy prices, compounded the negative sentiment.
“…the near-term outlook remains strongly bearish, and any pullback towards resistance levels is likely to be sold into unless sentiment improves materially,” said Hitesh Tailor, Technical Research Analyst at Choice Equity Broking.
The Nifty opened with a gap-down of 580 points, staged a brief 15-minute recovery attempt, then slid lower after 1 pm, closing near its one-year low. Bank Nifty fell 3.4 per cent. All sectoral indices closed in the red with auto, realty, financial services and private bank indices among the deepest losers. Downstream oil refiners, paint companies, tyre manufacturers and aviation stocks bore additional pain from margin-compression fears. The Nifty Midcap 100 fell 3.19 per cent and Nifty Smallcap 100 dropped 2.94 per cent.
Globally, Asian markets closed sharply lower: Japan’s Nikkei 225 fell 3.38 per cent to 53,372.50; Hang Seng declined 2.02 per cent to 25,500.60; South Korea’s Kospi dropped 2.73 per cent to 5,763.22; Taiwan Weighted lost 1.92 per cent; Shanghai Composite shed 1.39 per cent to 4,006.55; and Australia’s ASX 200 fell 1.65 per cent to 8,497.80. Bangladesh’s DSE 30 bucked the trend, rising 0.37 per cent. Equities across Europe also down in the range of 1-4 per cent.
Gold falls over 3.4%
Contrary to expectations, safe-haven assets offered no refuge. Gold fell over 3.4 per cent on Comex, breaching $4,700, while silver dropped nearly 6 per cent, as the Fed’s hawkish posture strengthened the dollar. DII-buying provided only partial cushion. As against FPI selling of ₹7,207 crore, DIIs bought shares worth ₹3,410 crore.
Technically, the Nifty has breached its prior swing low of 22,955, slipping below all major moving averages. Immediate support lies at 22,700–22,500, while the 23,378–23,618 gap zone acts as stiff resistance.
“…any pullback is likely to attract selling pressure as long as the index trades below its 21-day EMA,” said Vishnu Kant Upadhyay, AVP Research Advisory, Master Capital Services.
Markets will track geopolitical developments, crude price trajectory, and policy decisions from the Bank of England and the European Central Bank in the coming sessions. Analysts say a clear de-escalation in West Asia tensions is the only near-term catalyst that could arrest the downtrend, failing which the index remains biased toward further weakness.