Indian equity markets witnessed a sharp selloff on Friday, with the benchmark index Sensex falling over 1,000 points due to a weak monsoon forecast and uncertainty over the US-Iran peace deal. Sensex also saw a sudden fall at 3 pm as the MSCI rebalancing kicked in during the last half-hour of trading.
The 30-share index closed 1,092.06 points, or 1.44 per cent, lower at 74,775.74, while the NSE Nifty50 dropped 359.40 points, or 1.5 per cent, to settle at 23,547.75.
Sensex opened higher and moved in a tight range for most of the session. However, at 3 pm, it fell 850 points in 10 minutes after the global index provider MSCI rejig that added four Indian stocks and removed four from its Global Standard Index in its latest update.
National Aluminium, Federal Bank, Indian Bank and Multi-Commodity Exchange of India are set to enter the index, while Kalyan Jewellers, Hyundai Motor India, Rail Vikas Nigam and Jubilant Foodworks will exit it.
Weather Forecast Keeps Markets On Tightrope
The India Meteorological Department’s forecast of below-normal rainfall during the June-September monsoon season was one of the key triggers for Friday’s selloff.
“The market witnessed broad-based selling pressure following the IMD’s monsoon forecasts to 90 per cent of the long-period average, raising concerns among investors. The prospect of deficient rainfall, coupled with the increasing likelihood of an El Nino weather pattern, has heightened fears of elevated food inflation in the coming month,” Vinod Nair, Head of Research, Geojit Investments Limited, told PTI.
Another key trigger for Friday’s selloff was the growing uncertainty over the US-Iran peace deal. Mediators have for weeks tried to process a peace agreement between Iran and the US that would ultimately end the war in the Middle East. Reports claimed the two sides have finally agreed on a memorandum of understanding (MoU) to prolong their fragile ceasefire for 60 days and launch negotiations on Iran’s nuclear programme.
However, US Vice President JD Vance has now claimed that the framework for a ceasefire extension is yet to be approved by President Donald Trump.
