Equities extended their losing streak on Monday, weighed down by a sharp rise in crude oil prices amid renewed concerns over the Strait of Hormuz and growing fears of a Federal Reserve rate hike following stronger-than-expected US jobs data. The risk-off mood kept Dalal Street under pressure through the session.
The settled at 23,779.15, down 118.55 points, or 0.50 per cent, while the fell 382.62 points to 76,132.81. Bank Nifty ended at 57,088.30, down 281.35 points. The Nifty Midcap 100 declined 0.5 per cent, while the Smallcap 100 ended marginally higher by 0.02 per cent, indicating selective buying in the broader market.
“Domestic main benchmark indices and large-cap stocks remain influenced by developments in the Strait of Hormuz… the broader market rally is becoming stretched, leaving Dalal Street increasingly exposed to supply-chain disruptions and the risk of weaker high-frequency macroeconomic indicators,” said Vinod Nair, Head of Research, Geojit Investments.
Selling was broad-based, with IT and Media emerging as the worst-performing sectors, declining 2.3 per cent and 3 per cent, respectively. Stronger-than-expected US non-farm payrolls data for August, at 162,000 against expectations of around 56,000, raised expectations of a September Fed rate hike, with market-implied odds rising from around 50 per cent to nearly 60 per cent.
PSU Banks, Realty, Metals and Cement also declined over 1 per cent each. Pharma and Auto bucked the trend, with Nifty Pharma gaining 0.4 per cent as investors favoured defensive sectors.
Crude oil remained the key pressure point. Brent crude traded near $96.7 a barrel, while WTI held in the $90-$93 range, amid renewed concerns over shipping disruptions through the Strait of Hormuz. Brent and WTI had already gained around 8 per cent and 10 per cent, respectively, last week, marking their strongest weekly gains since July.
Gold and silver also eased. Spot gold declined around 0.5 per cent to nearly $4,410 an ounce, while silver slipped to $65.7. “With this week’s inflation print the last major data point before the Fed’s September 15-16 meeting, they carry outsized weight in shaping the rate path,” said Kaynat Chainwala, AVP, Commodity Research, Kotak Securities. She added that precious metals are likely to remain rangebound until inflation data provides greater clarity on the rate outlook.
The Indian rupee remained relatively stable at around ₹84.4 to the US dollar, aided by RBI intervention, even as elevated crude prices weighed on the currency. Domestic crude futures remained above ₹8,600 a barrel.
India VIX rose 5.62 per cent, signalling heightened volatility. “Above 23,850, a pullback could continue till 23,950-24,000; below this, a correction wave is likely to continue toward 23,670-23,600,” said Shrikant Chouhan, Head of Equity Research, Kotak Securities.
Primary market activity remained strong, with 12 IPOs set to open this week, collectively targeting around ₹7,000 crore, making it a busy week for the primary market.
Markets will track US inflation data this week, the last major economic release ahead of the Fed’s September 15-16 policy meeting, along with EU GDP due later Monday and Japan’s GDP on Tuesday. Analysts expect the sell-on-rise strategy to remain in play until the Nifty decisively reclaims the 24,000 level.