The stock market tanked on Thursday, with BSE Sensex losing over 806 points, or 2.24 per cent, to settle at 35,169 as frontline stocks, including Reliance Industries, were battered. An across-the-board selling was sparked by a steep fall in rupee’s exchange value and rising crude oil prices.

Broader index NSE Nifty closed at 10,599 points, 259 points lower than its previous closing. Analysts said there may be more pain ahead. Bank of America Merrill Lynch has 32,000 year-end target for BSE Sensex. Among 30 Sensex scrips, only six stocks ended in the green. Reliance, ONGC, TCS and HeroMotorCorp were down by 4-7 per cent.

Oil refiners were the worst hit with IOC dropping a massive 11.4 per cent, HPCL 13.5 per cent and BPCL 12.4 per cent. Reliance Industries was down over 7 per cent.

The total market capitalisation fell below $2 trillion for the first time since August 2017 due to selling in the recent months over growing fear of worsening fundamentals.
Foreign brokerage houses are sounding cautious and FPIs are selling in emerging markets which is visible in India also, traders noted.

Uncertainties over oil prices and next year’s forthcoming elections may “keep domestic sentiment and equity flows in check,” Bank of America Merrill Lynch strategists Sanjay Mookim and Nafeesa Gupta wrote in a report, maintaining a cautious stance on Indian equities.

Another global brokerage firm, Credit Suisse Group AG, also struck a cautious tone in a note, saying there’s too much confidence over the economic expansion and advising investors to avoid shares of companies that may fall should the data disappoint. “We worry that consensus GDP growth expectations are too optimistic as the import bill for the energy needed to drive that growth would turn out to be too high, given the slow capital inflows,” it wrote in a note.

According to analysts, the rupee hitting record low, crude prices moving northwards, increasing fears of a broadening current account deficit along with liquidity worries led to another major fall in the indices & broader markets.

Anxieties over the Reserve Bank of India (RBI) adopting an aggressive stance in its monetary policy due to a rise in inflationary pressure led to erosion in investor appetite. With deteriorating macros, all eyes will now be on the second quarter earnings and how the current liquidity situation is addressed.