Indian stocks plunged on Thursday, registering their most severe daily drop since June 2024, as a double shock from a sudden leadership exit at HDFC Bank and a jump in crude oil prices rattled investors.
The Nifty 50 slid 3.26% to end at 23,002.15 points. The BSE Sensex registered an identical percentage decline and closed at 74,207.24.
The selloff followed reports that HDFC Bank shares plunged after the unexpected departure of the lender's chairman. At the same time, attacks on energy facilities in the Middle East drove Brent crude higher, pushing prices to their strongest level in over a week and exacerbating worries about supply disruptions.
Market participants also expect the Indian rupee to weaken when local foreign exchange trading reopens on Friday, with forecasts pointing to a move past the 93 to the dollar threshold after the break in trading.
Analysts and market observers pointed to the combined pressures of domestic political or corporate shocks and externally driven energy-market disruption as the proximate causes of the decline. Because India imports the bulk of its crude oil and natural gas, sustained upward pressure on energy costs has a direct bearing on domestic inflation, economic growth and the country’s external balances.
Specifically, a protracted rise in oil and gas prices threatens to lift inflation, drag on economic growth prospects and widen the current account deficit for Asia's third-largest economy. Those concerns fed through to equity valuations on Thursday, contributing to the sharp fall in benchmark indices.
The day's action underscores the sensitivity of Indian markets to both sudden corporate developments and geopolitical shocks that affect global energy supplies. Investors are likely to monitor further developments around HDFC Bank's leadership and the security situation in the Middle East as they reassess risk and positioning.
Context limitations: The reporting here is limited to the developments and market reactions described above and does not introduce additional events, data or commentary beyond those cited.