Markets Decline Following Modi's Call for Fuel Conservation and Reduced Gold Purchases

Markets Plummet as Prime Minister Modi Urges Indians to Cut Fuel Consumption

Mumbai: The Indian stock market experienced its steepest single-day fall since 30 March on Monday, following Prime Minister Narendra Modi's remarks urging Indians to cut fuel consumption, avoid buying gold for a year, and limit foreign travel. The West Asia conflict has led to supply constraints, putting pressure on the rupee and India's import bill.

The Nifty 50 and the Sensex slumped 1.49% and 1.7%, respectively, marking their steepest single-day fall in recent times. The Prime Minister's remarks triggered a broad selloff across sectors seen as vulnerable to potential curbs or price increases. Oil marketing companies (OMCs), jewellers, airlines, and hotels were among the hardest hit, with shares falling sharply.

Key Losers

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According to Prashant Vashisht, senior vice president & co-group head for corporate ratings at Icra Ltd, Indian OMCs are already incurring substantial losses on the sale of auto fuels and domestic LPG. At crude prices of $120-125 per barrel, and considering the past 10-year average crack spreads for auto fuels, OMCs are incurring losses of around ₹1,000 crore per day on the sale of auto fuels and domestic LPG.

Investors are worried that a possible hike in petrol and diesel prices could worsen inflationary pressures. Rajesh Palviya, head of research at Axis Direct, said the markets could see a further knee-jerk reaction if the government announces a hike in fuel prices. Such a move could add to inflationary pressures at a time when monsoon uncertainty and ongoing heatwave conditions are already fuelling concerns over food prices.

The El Nino and temperature channel can add 0.5 percentage points to inflation over a year, said Pranjul Bhandari, chief India economist/strategist, and Asean economist at HSBC Ltd. "Along with energy shocks, we expect headline inflation to average 5.6% in FY27," Bhandari added. To be sure, headline inflation averaged 2.06% in FY26, data from the statistics ministry showed.

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Indices under pressure, the Nifty 50 has hovered within a defined range of 24,482 and 23,796 in the past 12 trading sessions. On Monday, the index closed towards the lower end of the range at 23,815.85, indicating increased selling pressure. The selloff was broad-based, with the Nifty Midcap and Nifty Smallcap indices falling 1% and 1.06%, respectively. Except for defensive sectors such as Nifty Pharma (0.25% rise) and Nifty FMCG (0.08% rise), all major sectoral indices closed in the red on Monday.

The BSE market capitalization fell by ₹6.1 trillion to ₹467 trillion on Monday.