MUMBAI: The escalating war in West Asia took a toll on investors on Dalal Street as stocks collapsed on Monday, leaving them poorer by Rs 6.6 lakh crore. As geopolitical risks escalated due to the war between the United States, Israel and Iran, the index closed down 1,048 points (1.3%) at 80,239 points, a closing level not seen in almost six months.Today’s session began with the index falling by nearly 3,000 points, as a knee-jerk reaction to the joint US-Israeli attack on Iran on Saturday morning. But buying soon emerged at lower levels and the index recovered some of the early losses.At the end of a volatile session that saw the NSE Volatility Index (VIX) rise by 25%, the Sensex closed well above the intraday low of 78,544 points. NSE’s Nifty followed a similar path to close 313 points (1.2%) lower at 24,866 points.
The sharp rise in the VIX index, also called the fear index, indicates increasing uncertainty and risk aversion among market participants, market participants said.
Foreign funds led the selling as net outflow for the day reached nearly Rs 3,300 crore, stock market data showed. Official data showed that the fall in stock prices during the day made investors poorer by Rs 6.6 lakh crore, with the market capitalization of the BSE now standing at Rs 456.9 lakh crore.According to Vinod Nair, head of research at Geojit Investments, rising geopolitical tensions in West Asia have destabilized global markets, with concerns about the potential extension of the situation in light of the killing of Iran’s supreme leader.
“High crude oil prices and a weak (rupee) reflect concerns about potential disruptions in oil supply, which could increase inflationary pressures in India, weigh on public finances and pressure margins in energy and chemicals-dependent sectors.
“On Monday, most markets around the world fell, starting with Asia. At the close, the Nikkei in Japan fell by 1.4% while the Hang Seng in Hong Kong closed by 2.1%. But Shanghai in China bucked the trend and closed 0.5% higher.
In Europe, the UK’s FTSE fell 1.3% in late trading, while Germany’s DAX fell 2.6%.Of the 30 Sensex stocks, 27 closed in the red. Among these companies, L&T and RIL contributed the most to the Sensex’s slide. Only BEL, Sun Pharma and ITC closed with gains.Oil marketing companies were among the most affected. Indian Oil closed down 4.5%, Petronet LNG closed down 4.4%, and Adani Total Gas closed down 3.7%. Crude oil producers, Oil India and ONGC, closed higher. The Bahrain Stock Exchange Oil and Gas Index fell by 2.3%.
