2 hrs ago
Indian Stocks Crash as Global and Insurance Fears Mount
Indian shares fell sharply on Thursday because investors became worried about several problems at once.
Oil prices stayed very high, above $102 per barrel.
Higher oil prices can increase costs and inflation concerns.
US government bond yields also rose to their highest level since 2007.
This made safer investments look more attractive than stocks.
The Indian rupee weakened against the US dollar as these worries grew.
Banks and insurance companies fell especially hard after the insurance regulator proposed limits and changes to commission payments.
Some financial stocks, including PB Fintech, lost a large part of their value during the day.
Together, these events erased nearly ₹5 lakh crore from the value of Indian-listed companies.
The Sensex fell 1,248 points, or 1.67%, to 73,580.54, while the Nifty 50 declined 383.70 points, or 1.6%, to 23,063.10.
BSE-listed companies lost nearly ₹5 lakh crore in market value, with total capitalisation falling to ₹480.99 lakh crore.
Banking, financial services and insurance stocks led the selloff after proposed IRDAI commission-rule changes raised concerns about payouts to banks.
Brent crude stayed above $102 per barrel, while the US 10-year Treasury yield reached 5.11%, reducing the appeal of emerging-market equities.
The rupee weakened to 95.87 per US dollar, while rising expectations of another US Federal Reserve hike added to pressure on Indian stocks.
- Who
- Indian stock-market investors, banks, financial companies and insurance firms were affected; the Insurance Regulatory and Development Authority of India proposed commission-rule changes.
- What
- The Sensex and Nifty 50 suffered a broad selloff, led by banking, financial services and insurance stocks.
- Where
- Indian stock exchanges, including the BSE and Nifty market.
- When
- Thursday, during the reported trading session.
- Why
- Investors reacted to higher global bond yields, elevated crude prices, a weaker rupee, increased expectations of US interest-rate hikes and proposed insurance commission limits.
Regulatory rationale
Market and industry concerns
Insurance commissions
Regulatory rationale
The Insurance Regulatory and Development Authority of India questioned the economics of bank-led insurance distribution and proposed tighter caps on commissions and distribution payouts.
Market and industry concerns
Investors viewed the proposed changes as a threat to the earnings and valuations of banks, insurers and insurance-distribution companies, triggering heavy selling.
Global risk conditions
Regulatory rationale
Higher bond yields and possible further US rate increases reflect efforts to address inflationary pressure, including pressure from elevated crude prices.
Market and industry concerns
Investors became less willing to hold riskier emerging-market equities as US yields rose, oil stayed above $102 and the rupee weakened.
Key facts
- Sensex close
- 73,580.54, down 1,248 points or 1.67%
- Nifty 50 close
- 23,063.10, down 383.70 points or 1.6%
- Market-capitalisation loss
- Nearly ₹5 lakh crore in one session
- BSE-listed market capitalisation
- ₹480.99 lakh crore, compared with ₹485 lakh crore previously
- US 10-year Treasury yield
- 5.11%, its highest level since 2007
- Brent crude
- Remained above $102 per barrel
- Rupee
- Fell to 95.87 per US dollar in early trade
- Biggest reported decliner
- PB Fintech fell 28%-30% intraday
Quotes
Dr V K Vijayakumar
Chief Investment Strategist at Geojit Investments
“The sharp spike in Brent crude above $102 and the US 10-year bond yield rising to 5.11% will weigh on the market today. So long as these two global headwinds remain, the prospects of a smart recovery in the market appear remote.”
livemint.com
Jateen Trivedi
Vice President and Research Analyst for commodities and currency at LKP Securities
“The rupee continues to hover in the 95.60-95.95 zone, with persistent FII selling in Indian markets keeping sentiment cautious. Going ahead, US-Iran developments, Xi Jinping’s US visit and UN meeting updates could keep currency markets volatile.”
livemint.com
Sources
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