India’s major stock indexes fell in early trade on Monday as escalating tensions in the ongoing US-Iran conflict rattled global markets and raised fears of prolonged inflation and higher crude oil prices. The BSE Sensex fell 845.68 points to 76,482.51 in opening trade, while the NSE Nifty fell 237.90 points to 23,936.85.
Investor sentiment declined after US President Donald Trump rejected Iran’s latest peace proposals, raising concerns that the conflict in West Asia may last longer than expected.
The decline also comes a day after Prime Minister Modi urged Indians to adopt austerity measures to limit the economic fallout of the US-Iran war.
Brent crude rose 4.1% to about $105.5 per barrel amid fears of prolonged supply disruptions in the Strait of Hormuz, a major global oil shipping route.
The sharp rise in crude oil prices also impacted the rupee, as it collapsed by 139 paise to 94.90 against the US dollar in early trade. Forex traders attributed this decline to the rise in oil prices, the strengthening of the dollar, and continued investor inflows from foreign institutions.
Market data showed that “all 16 major sectors recorded losses at the open,” while the broader mid- and small-cap indices fell by 0.5% each.
Shares of oil marketing companies such as Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation fell by about 1% each as investors worried about high recovery rates due to rising crude prices.
Travel and aviation-related stocks were also under pressure after Prime Minister Narendra Modi urged citizens to reduce fuel consumption, avoid non-essential foreign travel and postpone buying gold amid the global crisis.
Jewelery stocks including Titan, Cinco Gold and Kalyan Jewelers fell between 3% and 4.5%, while airline InterGlobe Aviation fell 3.2%.
Analysts said that the rise in crude oil prices poses a major threat to India, the third largest oil importer in the world, as it increases inflationary pressures, expands the import bill and affects corporate profits and economic growth.
Meanwhile, foreign institutional investors sold shares worth $4,110.60 crore on Friday, according to stock exchange data. India’s foreign exchange reserves also fell by US$7.794 billion to US$690.693 billion in the week ending May 1, according to Reserve Bank of India data.
