Benchmark stock indices fell sharply on Tuesday, with the Sensex falling more than 1,700 points during intraday trade after US President Donald Trump made a surprise statement on the Iran war.
The benchmark Nifty 50 index fell 2.03 per cent to 23,902.64, while the BSE Sensex fell 2.1 per cent to 76,570.47, as of 2:35 pm, according to data in the Reuters report which added that if the losses persist, this would be the biggest percentage decline for the indices in over two months. Track Iran War updates on July 8 here
IndiGo was among the stocks that fell the most – about 5.5 per cent – perhaps due to concerns that rising tensions in West Asia could lead to higher aviation fuel costs and disrupt flight operations in the region.
Why did the market fall today?
The sharp decline in the stock market came after US President Donald Trump said on Wednesday that the ceasefire with Iran had “ended” with the outbreak of fighting between Tehran and Washington.
The United States launched strikes on Iran on Tuesday, attributing the reason behind this to Iranian attacks on ships in the vital Strait of Hormuz. The strategic shipping route remains a flashpoint in the conflict that began in late February with large-scale US-Israeli strikes on Iran.
Tehran insists on controlling the waterway, saying it will impose traffic fees and threaten to strike ships that deviate from its permitted course.
“For me, it’s over,” Trump said at the NATO summit in Turkey on Wednesday when asked if the truce was in order, adding, “It’s just a waste of time to deal with them.”
He added: “I will allow our wonderful negotiators to continue talking if they want to, but I don’t see it. I don’t like these people.”
Fighting between the United States and Iran has largely stopped under a fragile peace memorandum. Maritime traffic has also temporarily resumed after Washington and Tehran signed the memorandum last month, but Iran insists there will be no return to pre-war arrangements, under which ships can pass freely through the strait.
Under the 14-point US-Iranian memorandum of understanding, Iran and Oman, which border the Strait of Hormuz, must hold talks “to determine future management and maritime services” in the waterway with other Gulf states.
US Central Command (CENTCOM) said on Tuesday that its forces struck more than 80 targets, including Iranian air defense systems, coastal radar sites and 60 small boats belonging to the Iranian Revolutionary Guard.
He added that the strikes aim to “undermine Iran’s ability to continue attacking international trade flowing through the international trade corridor.”
Iran was quick to respond, with the Revolutionary Guard saying it had struck dozens of US military facilities in Kuwait and Bahrain.
