Indian Equity Markets Crash as RBI Raises Interest Rates
Indian stock markets plunged on Thursday, wiping out ₹7.69 lakh crore in wealth following a surprise RBI rate hike and surging crude oil prices.
Indian equity markets crashed on Thursday afternoon, with the BSE Sensex plunging over 1,000 points and the NSE Nifty dropping more than 350 points. The sell-off wiped out approximately ₹7.69 lakh crore in investor wealth.
The Reserve Bank of India intensified domestic pressure by unexpectedly raising the repo rate by 25 basis points to 5.50%, marking the first hike in nearly four years. Governor Sanjay Malhotra indicated that near-term rate cuts are no longer an option as the bank shifts toward calibrated tightening.
External factors contributed to the decline, as Brent crude oil prices climbed between $103 and $104.27 per barrel due to war in Iran and Middle East supply concerns. Simultaneously, US 10-year Treasury bond yields reached levels not seen since 2002, dampening global sentiment. Foreign institutional investors extended a nine-session selling streak, offloading equities worth over ₹6,100 crore on Wednesday. Similar declines were observed in the Nikkei and Hang Seng indices due to energy-linked inflation fears.
