The Indian stock market resumed its losing streak on Friday, March 27, after a two-day recovery rally, as sentiment was dented by a rebound in crude oil prices and a sharp rise in Indian 10-year bond yields. Conflicting signals from the US and Iran on a potential ceasefire further weighed on sentiment, prompting traders to move away from riskier assets.
The Nifty 50 closed 2.09% lower at 22,819, erasing much of its recent gains and extending its weekly losing streak to five sessions.
The S&P BSE Sensex ended at 73,580, down 2.25% from the previous close. The broader market also saw heavy selling, with both the Nifty Midcap 100 and Nifty Smallcap 100 indices declining by up to 2.3%.
Losses were largely led by PSU banks, with the Nifty PSU Bank index plunging 4% in response to the sharp rise in bond yields. The Indian 10-year bond yield surged to 6.9%, hitting its highest level since July 2024, driven by a mix of fiscal pressures, energy shocks, and heavy debt supply, which pushed borrowing costs higher.
Additionally, the recent excise duty cut on petrol and diesel has heightened concerns over the fiscal deficit and long-term fiscal sustainability, further unsettling investors.
Meanwhile, crude oil prices remained elevated, with Brent crude topping $110 per barrel as traders grew increasingly sceptical about the prospects of a US-Iran ceasefire to end the month-long conflict.
US President Donald Trump said he would extend the pause on potential attacks on Iran’s energy infrastructure by 10 days, adding that talks with Tehran had gone “very well.” This follows his earlier decision to halt strikes for five days.
However, hostilities persist, with Israel continuing missile strikes on Iran, while Tehran has intensified its attacks across the Gulf region and tightened its grip on the Strait of Hormuz.
(more to come)