Sensex closed 829 points lower at 76,034, and Nifty 50 ended the session around 228 points lower at 23,639, extending decline for the second consecutive day. The sharp selloff wiped off nearly Rs 2 lakh crore from the total market capitalisation of all companies listed on BSE, dragging it down to a little over Rs 440 crore.
Mahindra & Mahindra (M&M), Maruti Suzuki, Bajaj Finance, Larsen & Toubro (L&T), UltraTech Cement and Zudio-parent Trent were among the top losers on Sensex, falling 2-4% each. NTPC, Tech Mahindra and Power Grid were among the top gainers, rising 1.5-3%.
Nifty Auto was the top sectoral loser on NSE, falling more than 3%. Nifty FMCG, Nifty Private Bank and Nifty Realty followed, dropping around 2% each. 1,238 stocks advanced on NSE, while 1,966 declined and 98 remained unchanged.
Here are the key factors pushing markets down today:
1) Iran-Israel war escalates further
The raging war between Iran and Israel-US further escalated, with Iran launching multiple attacks on several countries in the Middle East. Earlier yesterday, Iran set ablaze two tankers in Iraqi waters. Iran also targeted fuel tanks at a facility in Bahrain’s Muharraq, the interior ministry said. Iraqi security officials said Iranian explosive-laden boats had hit two fuel oil tankers amid other global supply disruptions from the U.S.-Israeli war on Iran. Additionally, multiple drones struck fuel storage tanks at the Port of Salalah in Oman, with fire erupting in at least two fuel tanks.
US President Donald Trump again claimed that the war with Iran could end “soon”, claiming that American forces have already inflicted massive damage on Tehran’s military capabilities. “Little this and that… Any time I want it to end, it will end,” Trump said, adding that the conflict was progressing faster than expected.However, markets seemed to ignore Trump’s assurances, as similar claims came earlier as well, although the war continues to show no sign of diplomatic resolution.
2) Crude prices jump back above $100
As a result of the rising hostilities and attacks on oil tankers, oil prices surged. The crude oil prices crossed the key psychological mark of $100 on Monday for the first time since Russia’s invasion of Ukraine back in 2022. Oil prices cooled down later, falling below the $90 mark on hopes of a sooner end to the raging war that began earlier this month when US and Israel conducted missile attacks on Iran, killing its supreme leader Ayatollah Khamenei, followed by massive retaliation from Tehran.
After Iran’s latest attacks on oil tankers, the country warned that the world should be ready for oil prices to hit $200 a barrel. “Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised,” said the spokesperson for Iran’s military command.
The latest escalations further dampened hopes for a sooner end to the raging war in the Middle East, and subsequent resumption of traffic through the Strait of Hormuz, which remains a critical choke point for oil imports and exports.
As a result of the rising hostilities, oil prices surged despite International Energy Agency (IEA) agreeing to release 400 million barrels of oil from its members’ strategic reserves, its largest ever stock release to ease the supply constraints.
Brent crude futures surged around 5% to $96.34 per barrel, while WTI Crude gained over 4% to $91.08 per barrel, as seen at 3.40 pm. Earlier in the day, the oil prices had surged further, crossing the $100 mark again.
3) FII selling continues
Foreign investors remained net sellers of Indian equities for the ninth consecutive session on Wednesday, net selling shares worth Rs 6,267 crore. FIIs have so far sold Indian equities worth Rs 50,119.06 crore over nine sessions till Wednesday.
While this doesn’t reflect their trading behaviour today, persistent selling by foreign investors seen for the past several sessions dampens investor sentiment.
4) Bond yield rises
US bond yields rose, tracking the rise in crude oil prices amid rising hostilities in the Middle East. The two-year Treasury yield, which typically reflects near-term rate expectations, rose to 3.649%, after having jumped to an over six-month high of 3.69% earlier in the session. The benchmark 10-year yield was up 2 bps to 4.2257%.
Rising bond yields tend to make government securities more attractive relative to equities, potentially putting pressure on stock markets.
5) Rupee declines
Indian rupee hit a record low on Thursday, falling to a fresh lifetime low of 92.3575 against the US dollar before recovering some losses. The Indian currency closed at 92.19 against the American greenback, marking a 0.16% drop from the previous session.
Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities, said that the dollar index hovering near 99 and volatile crude prices kept pressure on the currency.
6) Weak global markets
Global markets remained weak amid the rising global geopolitical tensions. Japan’s Nikkei 225 declined 1.5%, while South Korea’s Kospi fell 0.48%. Hong Kong’s Hang Seng declined over 0.6% and China’s Shanghai Composite fell marginally.
European markets were down slightly. UK’s FTSE, France’s CAC and Germany’s DAX falling in the range of 0.2-0.5%. Wall Street ended the previous session, as S&P 500 fell 0.08% and Nasdaq rose 0.08%
Geopolitical tensions in the Middle East continue to dampen global risk appetite, as fresh attacks on oil-shipping vessels have pushed crude prices closer to $100 per barrel, intensifying concerns over inflation and gas supply constraints, said Vinod Nair, Head of Research, Geojit Investments.
“The market is witnessing broad-based consolidation, although selective buying has emerged in renewables and utility stocks. In the near term, sustained risk-off sentiment and ongoing FII outflows are likely to keep both equities and the INR under pressure. However, the premium valuation of India has narrowed during the year, making it highly investable for a long-term investor, thus reducing the downside risk,” he added.
Rupak De, Senior Technical Analyst at LKP Securities, meanwhile said that Nifty 50 index has slipped below the recent consolidation low, heightening weakness amid the ongoing problems at the Strait of Hormuz. “Though the session remained somewhat volatile, overall selling pressure persisted at higher levels,” he added.
“In the short term, sentiment continues to support a bearish view, with sell-on-rise likely to remain the preferred strategy. The RSI indicator is in a bearish crossover and is declining further, entering a zone of significant weakness. On the lower end, support is placed at 23,400 / 23,200, while on the higher end, resistance is seen at 23,850,” he further said.
What should investors do?
External headwinds have pushed the market into a weak zone, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. “With the war continuing to rage with no signs of let up and Brent crude again bouncing back to $100 levels, the weakness is likely to persist. Even though DIIs are continuously buying in the market, DII buying is not helping the market to recover since FIIs are sustained sellers and show no signs of reversing their strategy in this uncertain global environment,” he said.
For investors, markets can be very frustrating during certain times – this is one such time, the analyst noted. “The lesson from market history is that attitude and temperament are important in these trying times. Experiences from previous geopolitical conflicts tell us that markets bounce back smartly once the conflicts get over. Therefore, investors should remain invested and continue with systematic investment plans,” Vijayakumar suggested.
Long term investors can use market weakness to slowly accumulate high quality bluechips across sectors, as this is also the right time to churn portfolios in favour of high quality stocks, according to the analyst.
Nifty 50 has formed a sizable bearish candle with a lower high and a lower low signaling lack of follow through to previous sessions pullback with the index testing the key support area of 24,000-23,700, said Bajaj Broking.
The domestic brokerage sees key support for Nifty 50 at 23,700-24,000, being the confluence of the 100 weeks EMA and trendline support joining low of CY23 and CY25. “Index holding above the same will lead to consolidation in the range of 24,400-23,700. A breach below the current week low 23,700 will open further downside towards 23,300–23,200 levels in the coming sessions. Volatility is likely to remain elevated amid uncertain global cues, rising crude price and escalating geo-political tension,” it added.
