Benchmark Indian stock indices opened sharply lower on Monday amid rising crude oil prices triggered by escalating geopolitical tensions in the Middle East.
The Sensex fell 1,561.71 points, or 1.92 per cent, to 79,725.48, while the Nifty fell 484.30 points, or 1.92 per cent, to 24,694.35.
Among Sensex voters, InterGlobe Aviation, Larsen & Toubro, Eternal, Adani Ports, Asian Paints, UltraTech Cement and Reliance Industries were among the top laggards.
Read also Sensex down 2,743 points, Nifty 50 well below 25,000 points as Iran war sparks stock market
Bharat Electronics was the only winner in this package.
Brent crude, the global benchmark, fell 5.38 percent to $76.79 per barrel.
Conflict in the Middle East leads to market volatility
Markets reacted to rising tensions in the Middle East following a coordinated US-Israeli airstrike in Tehran that killed Iranian Supreme Leader Ayatollah Ali Khamenei early Saturday. Iranian state media confirmed his death on Sunday.
In response, Iran launched missile attacks targeting Israel and several Arab countries, raising fears of prolonged regional instability.
Soon after, tensions rose throughout the Middle East. Saudi Arabia said that Iran launched attacks targeting its capital and eastern regions, but claimed that they were repelled. Bahrain announced a missile attack targeting the headquarters of the US Navy’s Fifth Fleet. Kuwait said a drone strike near its main international airport resulted in the injury of a number of employees and troops.
Jordan said it “dealt with” 49 drones and ballistic missiles. Explosions were also reported in Qatar. In Yemen, Iran-backed Houthi rebels have vowed to resume attacks on Red Sea shipping lanes and Israel.
Several countries, including Iran, Iraq, Israel, Syria, Kuwait and the United Arab Emirates, closed their airspace as a precaution.
Asian markets were mixed, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng falling, while Shanghai’s SSE Composite Index remained in positive territory. US markets closed lower on Friday.
“Uncertainty related to the war in West Asia will cloud the market in the near term. The main risk from a market perspective is energy risks arising from rising crude oil prices,” said VK Vijayakumar, chief investment strategist at Geojit Investments Limited.
FII outflows and support to the Indian Investment Initiative
Foreign institutional investors (FIIs) sold their worth shares $7,536.36 crore on Friday, according to stock exchange data, while domestic institutional investors bought shares worth… $Rs 12,292.81 crore.
“For investors, the risk extends beyond energy,” said Ponmudi R, CEO of Enrich Money, an online trading and wealth technology company. “Prolonged regional instability could disrupt trade routes, put pressure on supply chains and tighten global financial conditions if inflation expectations accelerate again.”
On Friday, the Sensex fell 961.42 points, or 1.17 per cent, to settle at 81,287.19, while the Nifty fell 317.90 points, or 1.25 per cent, to close at 25,178.65.
(with PTI inputs)
