Why is the stock market down today? Sensex drops over 600 points, Nifty drops below 22,400 - Top 3 reasons explained
The Indian stock market suffered significant losses in the morning trade on Monday, 26 October, with the benchmarks falling almost 1%. The Sensex crashed over 600 points, or nearly 1%, to an intraday low of 72,514.57. The Nifty hit the day's low of 22,387.35, falling over 200 points, or 1%. The BSE 150 Midcap index and the BSE 250 Smallcap index crashed more than 1% each.
Meanwhile, the Indian rupee declined 3 paise to 94.96 against US dollar in early trade.
Why is stock market down today
1. Oil prices near 6-month high
Although oil prices declined on Monday, it hovers near six-month high as ongoing attacks on Saudi Arabia kept supply concerns in focus.
Oil prices have been up for most of the year, stoking inflation fears, triggering monetary tightening, and raising concerns over its impact on the domestic growth-inflation dynamics.
"Despite the slight cooling in Brent crude price to below $115, the price continues to be too high and, therefore, will constrain any rally from the low level of 22,600 which Nifty touched last Friday," said V K Vijayakumar, Chief Investment Strategist, Geojit Investments.
"Investors should not bother about the index levels in the near-term. Their focus should be on the value buys that have emerged from this correction, even while exercising caution about the macro fallout of the high crude prices," said Vijayakumar.
2. Escalating Middle East conflict
Escalating Middle East conflict is keeping market pressure. According to AFP, "the Saudi-led military coalition said Monday it intercepted a ballistic missile fired by Yemen's Houthis, after the Iran-backed group claimed a new attack on the international airport in Riyadh."
3. US Fed in focus
Market sentiment is cautious ahead of the US Fed's policy decision on Wednesday. While the US central bank is expected to keep rates unchanged this time, a negative surprise cannot be ruled out as inflation risk is high due to the US-Iran conflict.
According to Reuters, CME's FedWatch Tool shows traders expect the US Fed to leave rates unchanged this week, while expectations for a hike in December are at 75%.
The US central bank's preferred inflation gauge, the US Personal Consumption Expenditures (PCE) data, is due the next day.