The Sensex plunged 900 points on 18 May, wiping out ₹6 lakh crore in investor wealth as the index touched an intraday low of 74,328, according to livemint.com. The Nifty 50 mirrored the fall, dropping over 1 percent to 23,358, marking the steepest single-day decline in recent weeks.
The rout began in early trade after Brent crude spiked $3.6 to breach $103 a barrel, the highest since October 2024, as reported by thehindubusinessline.com. Escalating tensions in the Strait of Hormuz, where Iran’s Revolutionary Guards seized a second oil tanker within a week, triggered algorithmic sell orders across banking, auto and energy counters. Foreign portfolio investors pulled out an estimated ₹3,800 crore in cash equities, exchange data cited by thehindubusinessline.com showed, amplifying the slide.
The selloff underscores India’s vulnerability to imported inflation: every $10 rise in crude adds roughly 0.4 percentage points to CPI, according to RBI estimates referenced by thehindubusinessline.com. With domestic fuel prices frozen since March ahead of key state elections, brokerages warn of margin compression for oil-marketing companies and higher working-capital stress for logistics and paint makers. The correction also compresses the MSCI India premium to MSCI EM to 42 percent, the narrowest since January, making the market less attractive to global funds already reallocating to cheaper Chinese equities.
Market participants will watch the US Federal Reserve’s minutes due Wednesday for rate-cut guidance, while the Reserve Bank of India’s monetary-policy meeting on 4 June is now expected to maintain a hawkish bias, livemint.com reported. Analysts peg immediate support for the Nifty at 22,900; a breach could trigger further derivative unwinding. Investors will also parse April retail-inflation data, scheduled for release on 20 May, for clues on how long the central bank can stay on hold.