Nifty50 slides 10% from Jan peak into 'correction' zone; VIX up 150% YTD

The sell-off on Dalal Street extended on Monday, with India’s benchmark Nifty 50 index falling more than 10 per cent from its January peak, as surging crude oil prices rattled stock markets worldwide.

 

The 50-stock blue-chip index fell as much as 3 per cent on Monday, entering the so-called ‘correction zone’, declining 10.1 per cent from its peak in January this year. In the broader market, the Nifty Midcap 100 index and the Smallcap 100 indices fell over 10 per cent from their January high levels.    

 

Meanwhile, the volatility gauge for local equities surged in the past five sessions, with the India VIX index rising 78 per cent. The index has jumped 152 per cent so far this year.

 

   

Among Nifty 50 constituents, Wipro Ltd., ITC Ltd., Jio Financial Services Ltd., Asian Paints Ltd., and Tata Consultancy Services Ltd. were among the top losers, with their shares falling by up to 25 per cent year-to-date.

 

The sentiment in the stock market was hit by soaring oil prices triggered by West Asia tensions and currency weakness. The pressure on the street came as Brent crude oil prices rose to their highest level since 2022, rising as much as 28.9 per cent to $119.5. West Texas Intermediate, the light, sweet crude oil produced in the US, was trading at $113.4 a barrel, up 24.7 per cent from Friday's close. 

 

The US crude price jumped by 35 per cent, and Brent crude rose by 28 per cent last week. So far this year, WTI and Brent crude oil prices rose 98 per cent and 88 per cent, respectively. Iraq, Kuwait and the UAE have cut their oil production as storage tanks fill due to the reduced ability to export crude, according to news reports. Iran, Israel and the US have also attacked oil and gas facilities since the war started, exacerbating supply concerns.  If geopolitical tensions continue to escalate and volatility remains elevated, Hitesh Tailor, Technical Research Analyst at Choice Broking, said. The Nifty 50 could extend its decline toward the 23,000-22,900 zone in the near term, which emerges as the next key short-term support area where some demand or short covering may emerge.   

"On the upside, the 24,300-24,500 band is likely to act as a strong resistance zone, and any relief rally towards this range may face supply and profit-booking pressure," Tailor said.

 

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In Asian markets, South Korea's Kospi has fallen 18 per cent in the past five sessions, while Japan's Nikkei 225 and China's CSI 300 indices are down 9 per cent and 3 per cent, respectively.

 

The risk-off for the global stocks came as the US and Israel fired missiles across Iran last week, with the Supreme Leader Ayatollah Ali Khamenei being killed. Iran responded with strikes against Israel, as well as US bases and other targets in states including Saudi Arabia, Qatar, the United Arab Emirates (UAE), Kuwait and Bahrain.  

 

This broad weakness in Asian equities could weigh on Indian markets keep volatility elevated in the early part of the session, Ponmudi R, chief executive officer (CEO) of Enrich Money. "In the near term, the market is likely to remain volatile and range-bound with a downside bias unless geopolitical tensions ease, crude oil prices stabilise, or supportive macroeconomic triggers emerge to restore investor confidence."

 

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