Market bleeds as W Asia crisis deepens

Geopolitical tensions in West Asia weighed heavily on market sentiment, as benchmark indices BSE Sensex and Nifty50 bled heavily on Thursday. The BSE Sensex index today crashed 1,769.19 points, or 2.10 per cent, to end at the 82,497.10 levels.

Nifty50 broke the 25,300 mark and tumbled 546.80 points (2.12 per cent) to finish at 25,250.10.

The BSE Sensex index hit an intraday low of 82,434.02, while the 50-share Nifty index plummeted to 25,230.30 during the day.

“This decline marked the third-largest drop of the year for Sensex, with nearly Rs 10 lakh crore wiped off market capitalisation. Key sectors such as Auto, Oil and Gas were among the biggest losers, with BPCL and Asian Paints under pressure due to crude oil prices nearing $75 per barrel,” said Vikram Kasat, Head (Advisory), PL Capital - Prabhudas Lilladher.

The largest fall — when Sensex tanked 4,390 points — was on June 4 when the general election results were announced. The second biggest decline was on August 5, when it plunged by 2,223 points.

According to experts, the flare up in Iran-Israel tensions soured the Dalal Street sentiment.

“The sharp decline was driven by several negative factors, including the escalating geopolitical tensions in West Asia. Iran launched ballistic missiles at Israel, causing a surge in crude oil prices. Speculation is growing that Israel may retaliate by targeting major oil fields in Iran, which could further fuel the rise in oil prices,” said Vishnu Kant Upadhyay, AVP (Research and Advisory), Master Capital Services.

According to Kant, the recent regulatory changes in the F&O (Futures & Options) segment by Sebi are expected to impact trading volumes, as retail participation may decline due to the increased contract size and limits on weekly expires. Meanwhile, the strengthening of the Chinese market following the People’s Bank of China (PBoC) stimulus package has also diverted foreign investment to China, where valuations remain more attractive compared to India.

Market analysts advised investors to remain cautious as they await the upcoming Q2 earnings, and also advised them to monitor policy decisions of the Reserve Bank of India and keep a watch on the global developments and crude oil price trends as key factors shaping market dynamics.