New Delhi: On September 7, the Nifty 50 fell 0.5% to 23,779.15, while the Sensex declined by a similar amount to 76,132.81. Both benchmarks slipped to their lowest levels in around six weeks. Over the previous four weeks, the Nifty had fallen about 2.7%, while the Sensex had lost around 2.5%.
The biggest pressure came from the IT sector. The Nifty IT index fell about 2.3% as investors reacted to stronger-than-expected US employment data. The data raised expectations that the US Federal Reserve could keep interest rates higher for longer or even consider another rate increase.
That matters for Indian IT companies because the United States is a major market for their services. Higher US interest rates can make companies more cautious about technology spending. For Indian IT firms, slower spending by American clients can affect new contracts, revenue growth and future earnings expectations.
Crude oil has added another layer of concern. Brent crude was trading around $96.8 a barrel amid continuing geopolitical tensions in the Middle East. Higher oil prices are particularly important for India because the country imports a large share of its crude requirement. A sustained rise in oil can increase India’s import bill and put pressure on inflation, the rupee and corporate margins.
The market is also watching the US Federal Reserve closely. Global investors are increasingly sensitive to the possibility of higher US rates because expensive dollar borrowing can reduce the attractiveness of emerging-market assets.
The pressure was broad-based. Mid-cap shares also declined, while several individual stocks saw sharp moves. PVR Inox fell 6.1%, while Zee Entertainment dropped 6.4% following developments related to an investigation.
Yet the fall should not be viewed only as an India-specific problem. Global markets are also dealing with the combination of higher oil prices, inflation concerns and changing expectations around central-bank policy.
