Nifty opened flat but soon witnessed selling pressure on account of surge in oil prices and weak global cues.
Nifty fell by 165 points (-0.8 per cent) to close at 19,551 levels, Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said.
Global sentiments have been dampened over sharp rise in Brent crude price which touched almost $98 per barrel and US 10 year bond yields continuing to hover above 4.5 per cent (16 year highs).
Also concerns over the likelihood of interest rates remaining higher for a longer has been adding to the global overhang, he said.
Broader markets too cracked with Nifty Midcap100/ Nifty Smallcap 100 down 1.3 per cent/ 0.4 per cent.
Volatility index - India VIX, spiked sharply to 13 levels, last seen in May 2023 before settling at 12.8 levels.
All the sectors entered in red with IT and FMCG being the biggest losers to the tune of almost 2 per cent, he said.
Going ahead, the weakness in the market is likely to extend till the worry over the elevated oil prices and higher interest rates remains, posing a risk to the earnings growth trajectory, he added.
Vinod Nair, Head of Research at Geojit Financial Services said that selling was broad-based, as investors are on alert given the rise of oil prices.
If crude continues to stay above the $90 level, it will be a threat to inflation and boil the operational margins.
Globally, US GDP data and the Fed chief speech will be watched carefully, which will set the future trend.
Currently, the combination of higher interest rates and US bond yields are influencing FIIs to stay in the selling mode, he said.
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