Markets open lower as renewed Hormuz tensions weigh on sentiment, oil surges to USD 113
Mumbai (Maharashtra) [India], May 5 (ANI): The equity markets came under pressure on Tuesday, with benchmark indices opening lower as renewed hostilities in the Strait of Hormuz pushed crude oil prices higher, denting investor sentiment.
The Nifty 50 index opened at 24,052.60, declining 66.70 points or 0.28 per cent, while the BSE Sensex opened at 77,102.88, down 166.52 points or 0.22 per cent.
Market participants said the weakness was largely driven by a surge in oil prices and rising geopolitical tensions in the Middle East, which have raised concerns about inflation and global economic stability.
Ajay Bagga, Banking and market expert, told ANI that the escalation in tensions has significantly increased market risks.
"Oil prices shot up and bond yields spiked on Day One of Project Freedom as Tehran's forces opened fire on US warships and commercial vessels. US Central Command head Adm. Brad Cooper said that American forces returned fire and destroyed six small Iranian boats. Cooper would not say whether the ceasefire between Washington and Tehran had ended," he said.
He added that Indian markets may find it difficult to sustain recent gains.
"Indian markets will find it tough to build on the positive FPI flows of Monday, given the surge in geopolitical risk and the crude oil prices. Given the weekly expiry today, markets would be volatile anyway. The risk is high that the US could resume kinetic action on Iran in retaliation for the attacks on the UAE and on shipping in the Persian Gulf," Bagga said.
Foreign and domestic institutional investors remained net buyers in the previous session. On May 4, FIIs bought equities worth Rs 2,835.6 crore, while DIIs purchased Rs 4,764.2 crore.
Sectorally, the trend remained mixed. Nifty FMCG, Nifty IT, and Nifty Pharma indices opened in the green, while Nifty Auto, Nifty Media, Nifty Metal, and PSU Bank indices faced selling pressure in early trade.
Crude oil prices remained elevated, with Brent crude trading at around USD 113 per barrel, driven by ongoing tensions in the Hormuz region.
In developments related to the Strait of Hormuz, Danish shipping company Maersk confirmed that one of its subsidiary vessels crossed the strait with a US military escort. The US Central Command also said that two American-flagged ships have passed through as efforts continue to restore normal shipping activity.
Other Asian markets also reflected cautious sentiment. Singapore's Straits Times index declined 0.36 per cent to 4,906, Hong Kong's Hang Seng index fell 1.29 per cent to 25,758, and Taiwan's weighted index slipped 0.15 per cent to 40,651. Markets in Japan and South Korea remained closed.
In the United States, markets ended lower on Monday. The Dow Jones Industrial Average dropped 557.37 points or 1.13 per cent to 48,941.90, the S&P 500 declined 0.41 per cent to 7,200.75, and the Nasdaq Composite fell 0.19 per cent to 25,067.80. (ANI)
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