New Delhi: Indian stock markets fell sharply on Monday amid across-the-board selling as tensions in the Middle East lifted global crude oil prices.
The rupee also slid past 72 against the US dollar in midday trading, hitting its lowest level since November 14, 2019.
The benchmark Sensex fell over 800 points, below the 41,000 mark, closing at 40,676.63 (down 787 points). The Nifty fell below the psychologically significant barrier of 12,000, down 233.60 points or 1.91%.
Among the Sensex stocks, Bajaj Finance fell nearly 5% while ICICI Bank, M&M, Nestle India, Asian Paints, Hero MotoCorp, IndusInd Bank, Maruti Suzuki, HDFC and SBI declined between 2% and 4%.
Geo-political concerns, premium valuation and cautiousness ahead of Q3 results led to the selling pressure, says Vinod Nair, head of research at Geojit Financial Services.
For instance, global oil benchmark Brent today surged past $70 for the first time since September 2019 when attacks on two Saudi Arabian facilities briefly halved output by the world’s top producer. Asian stock markets also tumbled on Monday after the US assassination of a top Iranian general last week fanned fears of a major conflict in the Middle East.
Equity markets never like uncertainties and it would result in weakness in the short term, says Ashish Nanda of Kotak Securities, referring to the tensions in Iran.
The ‘India VIX index’, commonly referred to as a volatility or fear gauge, also surged 17% to 14.81, reflecting the nervous sentiment prevailing among investors.
Iraq’s parliament demanded the departure of American troops from the country as fallout from Soleimani’s assasination.
The crisis has jolted investors, who had been in an upbeat mood as China and the US prepare to sign their mini trade deal, while data indicate a slight improvement in the global economy.
“The market was spooked by fears of an escalation in tensions between Iran and US. With INR depreciating and price of crude rising, stocks plunged deep into the red today. World over, investors have flocked to gold, as a safe haven. We reckon, in all likelihood, the geopolitical concern should ease in the weeks to come. Our stand is that we are in the middle of a global “risk-on” trade and an uptrend should resume after a brief pause, unless we see an escalation between US and Iran. I am more focused on local issues around the Indian economy and the Union Budget, which is around the corner, said Amar Ambani, Senior President and Research Head, Institutional Equities, Yes Securities.