Sensex, Nifty see worst day in weeks: Why was market down today?

Heavy selling in equity markets saw Nifty 50 drop 1.64% while the Sensex fell 1.67% on Thursday, logging their worst day in 10 weeks.

Equity markets came under heavy selling pressure on Thursday, with the Nifty 50 falling 1.64 per cent to 23,063.10 and the Sensex dropping 1.67 per cent or over 1,200 points to 73,580.54. Both indices recorded their steepest single-session decline since July 8.

The sell-off was driven primarily by surging crude oil prices (Reuters/File)

The rupee weakened by 23 paise to settle at 95.96 (provisional) against the US dollar on Thursday, dragged by a surge in crude oil prices and a strong greenback amid geopolitical uncertainties.

Why was market down?

The sell-off was driven primarily by surging crude oil prices, which revived concerns over inflation and its impact on the Indian economy. Amid the bleeding stock market indices, tensions escalated between Saudi Arabia and Yemen's Houthis allegedly launched ballistic missiles.

Saudi civil defence on Thursday issued a brief series of alerts including one for Mecca city, home to Islam's holiest sites, in warnings that usually indicate a potential missile or drone threat. The alert did not mention where the potential missile threat originated from.

Shortly after, Saudi-led coalition in Yemen said it intercepted six ballistic missiles launched by Iran-backed Houthis. The Houthis, at war with a Saudi-led coalition that has propped up the internationally-recognised Yemeni government since 2015, has upped its attacks against the kingdom, placing Yemen in the Middle East war.

Brent crude climbed 2.4 per cent to $105.6 a barrel after Iranian President Masoud Pezeshkian told the UN General Assembly (UNGA) that Tehran would never surrender to US pressure.

Hours later, Iran Supreme Leader Mojtaba Khamenei's adviser also said the country the geographical scope of its war could be expanded to the Indian Ocean if the United States launches another attack.

At the same time, diplomatic talks between the US and Iran showed little sign of progress, adding to concerns about oil supply.

"Crude remains a key variable for India, and the spike in oil prices after briefly slipping below $100 revives supply concerns just as domestic markets found its footing," Reuters quoted as saying Hemang Gor, senior research analyst of derivatives and technical research at Axis Direct.

"Technically, the undertone remains cautiously bearish as long as Nifty trades below 23,500."

The sell-off was broad-based, with all 16 major sectors ending lower. Small-cap and mid-cap stocks fell 1.5 per cent and 2.3 per cent, respectively. Banks and financial stocks were among the biggest losers, falling two per cent and 2.4 per cent, respectively.