Indian equity benchmarks continued the downtrend for the second consecutive session on the back of a fall in European markets and a further rise in crude oil prices.
The Nifty ended below the 5450 level on Wednesday, pulled down by financial, infrastructure, realty and technology companies' shares. Indices were quite choppy since morning but slipped into the red in the last one hour of trade.
Crude oil inched up 2.5% to USD 96.08 a barrel today - its highest level since October 2008 - on growing fears that the unrest in Libya could spread to other top oil producers in the region and cut output further.
Violent clashes in Libya have resulted in at least three oil companies halting output in Africa's third-largest producer, which pumps 1.6 million barrels per day (bpd), or nearly 2% of global supply.
"The Libyan situation has just highlighted the concern for the entire Gulf region. As we have seen this contagion spread from Tunisia to Egypt to Libya and now to Bahrain and Dubai and other areas of influence which are now coming under the concern of the people's revolution. It is more of a concern for the entire area and the potential that this could escalate, which is the concern and why people are actually building in this Middle Eastern premium," Jonathan Barratt, the Managing Director of Commodity Broking Services said.
International Energy Agency (IEA) executive director Nobuo Tanaka said that sustained oil prices over USD 100 per barrel for the rest of the year could tip the global economy back into a repeat of the 2008 economic crisis.