SENSEX, NIFTY50 post worst day in over six months as crude surges, US bond yield tops 5%

The Indian equity benchmarks posted their worst single-day performance since March 9 on Thursday, September 24, as rising bond yield in US and surging crude prices in global markets dented investor sentiment towards equities.

The SENSEX dropped as much as 1,264 points at the day's lowest level and NIFTY50 index touched an intraday low of 23,046.

The SENSEX closed 1.67% or 1,248 points lower at 73,580 and NIFTY50 index dropped 384 points or 1.64% to close at 23,063.

Investors' wealth worth ₹4.11 lakh crore was wiped out during the session from the companies listed on the BSE.

US bond yield at highest level since 2007

Investor sentiment was shaken after 10-year bond yield in the US jumped to 5.14%, its highest level since 2007. 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.

Surging crude

The sentiment was shaken further after crude oil prices soared in global markets as there were no signs of tensions between Iran and US deescalating any time soon.

Brent crude futures rose as much as 3.2% to an intraday high of $106.39 per barrel after diplomatic talks between the US and Iran showed little sign of progress, while investors focused on uncertainty about a potential US ban on diesel exports.

Financials lead the decline

Selling pressure was so intense that all the major sector gauges compiled by the National Stock Exchange (NSE) ended lower led by the NIFTY Financial Services index dropping 2.4%. Shares of financial services companies came under selling pressure after insurance regulator IRDAI proposed bringing back hard, product-level caps on life insurance commissions after removing such limits in 2023.

Under the proposed framework, commissions would vary according to the type of life insurance product, premium-payment term and distribution channel.

The regulator has also proposed higher remuneration for products requiring greater selling effort and providing stronger incentives for policy renewals and long-term policy persistency.

Shares of PB Fintech, the operator of online insurance distribution portal Policybazaar, closed 36% lower at ₹1,207. Turtlemint, another insurtech platform, dropped by its daily maximum limit of 20% to close at ₹109.

NIFTY Bank, Auto, FMCG, Metal, PSU Bank, Private Bank, and Oil & Gas indices also fell between 1% and 2%.

Mid- and small-cap shares also witnessed the heat of selling pressure as NIFTY Midcap 100 index dropped 2.35% and NIFTY Smallcap 100 index fell 1.5%.

Technical view

"The Nifty’s close near 23,000 confirms a breakdown from its recent 23,300–23,500 range. Weak breadth and Bank Nifty’s fall below 56,000 show that the decline was not limited to a few heavyweights," said Hariselvan Radhakrishnan, founder & CEO of HST Wealth, a SEBI-registered research firm.

"PCR dropped to 0.73, reflecting defensive positioning, while India VIX jumped to 12.68 as traders rebuilt protection. Immediate support is placed at 23,000, followed by 22,800, while 23,200–23,300 has become the first resistance zone," Radhakrishnan added.

NIFTY50 top losers and gainers

HDFC Life was top loser in the NIFTY50 index, the stock dropped 6.2% to close at ₹527. Bajaj Finance, Axis Bank, Bajaj Finserv, Adani Enterprises, IndiGo, Trent, Asian Paints, Reliance Industries, Hindalco and Jio Financial Services also fell between 2.13% and 6%.

On the flip side, Cipla, ONGC and NTPC were notable gainers in the NIFTY50 index.