Sensex Drops Over 400 Points as Oil Prices and Fed Decision Weigh on Markets

The Indian stock market faced a cautious start as the Sensex fell by more than 400 points on Monday, with the Nifty 50 index slipping below the 22,500 mark. Persistent worries about rising crude oil prices and the impending Federal Reserve policy announcement contributed to the subdued investor sentiment.

At 9:17 am, the BSE Sensex was down 414.35 points, or 0.57%, trading at 72,709.48 after opening at 72,990.04. The broader Nifty 50 index declined by 147.30 points, or 0.65%, to 22,452.70. These declines followed a series of market falls, highlighting the cautious mood ahead of key economic data and policy decisions.

Brent crude oil prices hovered near $115 per barrel in early trading, easing slightly from a near six-month peak of $117 reached after the Indian market closed on Friday. The surge in crude prices has been driven by ongoing attacks in Saudi Arabia, raising concerns about supply disruptions in the Middle East. These tensions have kept energy prices elevated, which in turn fuels inflation worries worldwide.

The Indian rupee weakened marginally, slipping three paise to 94.96 against the US dollar in early trade. This depreciation reflects the pressure from rising crude oil costs and global economic uncertainties.

Last week, the markets endured their fourth consecutive session of losses. The Nifty Smallcap 100 index was particularly hard hit, dropping nearly 3%, while 460 out of the 500 most tracked stocks ended in the red. The Nifty 50 closed Friday 0.39% lower at 22,600 after touching an intraday low of 22,372 before some buying interest emerged. The Sensex ended at 73,123.83, down 125.56 points or 0.17%, having fluctuated between a high of 73,766 and a low of 72,452. Over the past week, the Sensex recorded a 2.15% decline.

Among individual stocks, Shriram Finance experienced a steep drop of 4.7% in early trading following the company’s decision to lower its annual loan growth forecast and warnings about higher credit costs. Despite reporting a better-than-expected second-quarter profit, these cautionary signals weighed on investor confidence.

Similarly, Infosys shares fell 2.7% after the IT firm reduced its revenue growth guidance for fiscal 2027 to 1%-2%, down from the earlier forecast of 1.5%-3%. The cut was more significant than analysts had anticipated, reflecting softness in the company’s North American business segment.

On the upside, Kotak Mahindra Bank gained 2.42%, JSW Steel rose 1.26%, and Max Healthcare increased by 0.93%. These gains were seen amid a broadly negative market environment, indicating selective buying interest.

Global markets also showed mixed signals. South Korea’s KOSPI index dropped 1.5% as technology shares, including Samsung Electronics and SK Hynix, declined ahead of major earnings announcements. Meanwhile, geopolitical developments and economic data from key regions such as the US, Europe, and Asia kept investors cautious.

Looking ahead, attention is focused on the Federal Reserve’s meeting scheduled for October 27-28. Market participants widely expect the Fed to maintain current interest rates, but comments from Chair Warsh about future policy moves, particularly the possibility of a December hike, are being closely watched. Recent inflation data, including the upcoming Personal Consumption Expenditures (PCE) report, will also play a critical role in shaping expectations.

Gold prices steadied near $4,000 an ounce after last week’s sharp decline, supported by ongoing geopolitical uncertainty despite pressure from higher Treasury yields. Elevated energy prices and concerns about persistent inflation are influencing both commodities and equity markets.

In summary, the Indian stock market’s decline on Monday reflects a combination of external pressures from rising oil prices and geopolitical tensions, along with domestic corporate earnings updates and anticipation of central bank decisions. Investors remain alert to the evolving economic data and global developments that will influence market direction in the coming days.