Stock markets decline amid renewed West Asia tensions, higher crude prices

Stock markets closed lower on Monday amid selling in utilities, IT, and FMCG shares, as renewed tensions in West Asia pushed crude oil higher and fanned fears of a higher-interest-rate environment.

The 30-share BSE Sensex declined 307.24 points, or 0.40 per cent, to settle at 76,957.27 with 20 of its constituents ending lower and 10 with gains. During the day, it tanked 513.19 points, or 0.66 per cent, to 76,751.32.

The 50-share NSE Nifty dropped 95.25 points, or 0.39 per cent, to end at 24,080.40.

Weak trends in global markets and foreign fund outflows dented investor sentiment, analysts said.

Among the 30 Sensex firms, Adani Ports fell the most by 4.11 per cent.

Index major HDFC Bank reversed early gains to close down by 1.53 per cent as its CEO and Managing Director Sashidhar Jagdishan announced that he will opt for reappointment after his current term ends on October 26.

ITC, Bharti Airtel, Infosys, Kotak Mahindra Bank, Trent, Hindustan Unilever and Titan were also among the laggards.

Sun Pharma, ICICI Bank, Axis Bank and State Bank of India were among the gainers.

Brent crude, the global oil benchmark, jumped 3.63 per cent to USD 91.30 per barrel.

“Escalating tensions between the US and Iran have kept investors on edge, as fading prospects of a diplomatic breakthrough pushed crude oil prices and global bond yields higher. Rising crude oil prices and bond yields have renewed concerns over energy-led inflation and a higher interest rate environment, which could weigh on the earnings cycle,” Vinod Nair, Head of Research, Geojit Investments Limited, said.

Meanwhile, the Fed chair’s recent comments after the Jackson Hole address have increased expectations of a potential September rate hike, keeping global yields elevated and contributing to near-term volatility in emerging markets, he added.

“Indian equity markets ended lower on the final trading day of the month, with the Nifty slipping to a fresh monthly low as renewed US-Iran military escalation sent crude oil prices sharply higher, lifted global bond yields to multi-year highs and reinforced concerns that the Federal Reserve may need to keep policy tighter for longer,” Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.

Investor sentiment was further tempered by caution ahead of the MSCI index rebalancing at the close-the first major test of the new closing auction mechanism-which added to expectations of heightened end-of-session volatility, he added.

The BSE SmallCap Select index declined 0.40 per cent and MidCap Select index dipped 0.12 per cent.

Among BSE sectoral indices, Utilities tanked 2.64 per cent, Metal (2.42 per cent), Services (1.95 per cent), Commodities (1.52 per cent), Housing Finance (1.33 per cent), Power (1.31 per cent) and FMCG (1.14 per cent).

Financial Services, Private Banks index, Bankex, Top 10 Banks and MidSmall Private Banks ended higher.

In Asian markets, South Korea’s Kospi and Shanghai’s SSE Composite ended higher, while Japan’s Nikkei 225 index and Hong Kong’s Hang Seng index settled lower.

Markets in Europe were trading mostly lower. US markets ended in negative territory on Friday.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,039.80 crore on Friday, according to exchange data.

On Friday, the Sensex climbed 330.92 points, or 0.43 per cent, to settle at 77,264.51. The Nifty settled 84.80 points, or 0.35 per cent, higher at 24,175.65.