NIFTY50 tests 22,850, SENSEX plunges 900 points as surging crude, rising US yields weigh

The Indian equity benchmarks nosedived on Monday, September 28, as surging bond yields in United States and rising crude prices in global markets dented investor sentiment towards equities.

The NIFTY50 broke below its psychologically important level of 23,000 to hit an intraday low of 22,856 and the 30-share SENSEX dropped as much as 896 points on the back of a broad-based selling pressure.

As of 9:41 am, the SENSEX dropped 891 points to 73,005 and NIFTY50 index fell 270 points to 22,867.

Most of the Asian markets were trading lower tracking rise in 10-year US bond yields and surging crude prices.

Japan's Nikkei slipped 0.02%, China's Shanghai Composite declined 1.1% and South Korea's KOSPI index tumbled 2%.

Brent crude futures rose over 1% to $105.64 per barrel on Monday after US President Donald Trump rejected a peace deal from Iran to resolve their conflict and reopen the Strait of Hormuz, keeping tensions in the Middle East elevated.

Iran announced a peace proposal last week at the UN ⁠General Assembly in New York, saying it had been transmitted to the Americans via Qatari mediators. Trump said on Saturday he rejected the plan, but told Axios in a phone interview on Sunday that he expected US negotiators to engage in more talks this week, according to a report by news agency Reuters.

The 10-year US bond yield surged to its highest level in nearly 20 years to 5.2%.

Rising bond yields in US makes American bond markets more attractive leading to a flight of money to the safety of bonds from emerging market equities like India, analysts noted.

When US Treasury yields rise investors can get a higher low-risk return in US government securities which makes Indian assets relatively less attractive, analysts added.

Back home, India VIX, the measure of expected volatility in the market, spiked by 11.5% to 13.54.

Selling pressure was broad-based as all the major sector gauges compiled by the National Stock Exchange (NSE) were trading lower led by the NIFTY Bank index's 1.3% fall. NIFTY Metal, Financial Services, Auto, FMCG, PSU Bank, Private Bank, Realty and Oil & Gas indices also dropped between 0.8% and 1.5%.

Broader markets were also facing selling pressure as NIFTY Midcap 100 index declined 1.06% and NIFTY Smallcap 100 index dropped 1.12%.

Hindalco was top loser in the NIFTY50 index, the stock fell 2.5% to ₹952. Max Healthcare, Kotak Mahindra Bank, Hindustan Unilever, Bajaj Finance, Shriram Finance, Hindustan Unilever, Bajaj Finserv, Adani Enterprises, HDFC Bank and Bharat Electronics also fell between 1.5% and 2.2%.

On the flip side, Dr Reddy's Labs, Coal India, TCS, SBI Life and HCL Technologies were notable gainers in the NIFTY50 index.

The overall market breadth was extremely negative as 2,360 shares were falling while 708 were advancing on the NSE.