Sensex falls 1,045 points as Brent touches 104 dollars after the RBI hike

Indian equities fell hard on Thursday as oil moved back above 100 dollars and the market priced the Reserve Bank's rate rise from the day before. The Sensex closed at 71,593.24, down 1,045.46 points, or 1.44 percent. The Nifty 50 closed at 22,231.80, down 371.25 points, or 1.64 percent. During the session the Nifty touched 22,179.90, which dealers called an 18-month low and a 52-week low. Upstox put the loss in market value above 10 lakh crore. Metal and realty shares led the decline.

Brent crude was the number traders cited. Investing.com data carried by Upstox showed Brent up 4.2 percent on the day to an afternoon high of 104.43 dollars a barrel, against about 100 dollars at the previous close. The Financial Express quoted Brent later at 101.55, up 1.35 percent, and US crude at 89.42, up 1.2 percent. The range is the point. Oil was volatile and above 100 dollars while Indian cash equities were open. The cause sits in the Strait of Hormuz, where tanker strikes this week have slowed transits. A market that imports most of its crude reprices that risk in a session.

The rate decision underneath the oil move

The Monetary Policy Committee on Wednesday raised the repo rate by 25 basis points to 5.50 percent and dropped the neutral stance for calibrated tightening. The standing deposit facility rate is 5.25 percent. Thursday was the first full cash session after that vote. Higher oil and a higher policy rate push in the same direction on inflation expectations and on the discount rate applied to shares. Foreign investors have already been net sellers. Asian markets opened lower on Thursday, with the Nikkei down about 0.4 percent, the Kospi down about 0.35 percent and the ASX 200 down about 0.4 percent. India fell further than that opening tone.

Adani Enterprises was the weakest large name through the day and closed down 5.4 percent. The Financial Express had JSW Steel and ITC among the steepest losers, with ITC down 3.88 percent, Adani Ports down 3.47 percent, IndiGo down 3.04 percent, Power Grid down 2.53 percent and Reliance Industries down 2.39 percent. Upstox had described JSW Steel and ITC as down more than 4 percent at points in the session. The gainers were few and mostly in software and a consumer name: Titan up 1.47 percent, Tech Mahindra up 1.25 percent, TCS up 1.10 percent, Infosys up 0.95 percent, HCL Technologies slightly higher. Exporters with dollar revenues held up. Domestic demand and commodity names did not.

What 22,179 is for

An intraday low of 22,179.90 on the Nifty is a level funds will now use. It is below the close. A close at 22,231.80 means the last hour recovered a little of the day's damage and still left the index down 1.64 percent. For a portfolio benchmarked to the Nifty, that is a single-session hit larger than many weekly moves this year. The Sensex fall of 1,045 points is the figure that will be quoted in the morning papers. The Nifty low is the figure a risk desk will put on a chart.

The oil link is not automatic. India imports crude, so a Brent move from 100 to 104 dollars raises the import bill, the current account gap and the chance that the RBI's next meeting has to answer a fresh inflation print. It does not, by itself, cut 1,045 points off the Sensex. The cut came because that oil move arrived the day after a unanimous rate rise and a stance change, into a market already seeing foreign outflows and higher bond yields. Upstox noted the shift toward dollars and Treasuries that often accompanies that mix. Thursday's tape is the local version of it.

What would have to change on Friday

A Brent print back under 100 dollars would take one of the two pressures off. It would not undo Wednesday's 25 basis points. The repo rate is 5.50 percent until the committee moves it. Metal and realty shares, which led the fall, will trade on whether the oil spike looks like a day or like the start of a Hormuz premium that lasts. Software names that rose on Thursday have a different exposure: a weaker rupee helps translated revenue, and they do not buy crude. The split on the close, Titan and the IT firms up, Adani Enterprises down 5.4 percent, is the map of that difference. The index level to watch is no longer an abstract round number. It is 22,179.90, the low Thursday already printed.