The Indian stock market saw sharp upswings and downswings on Thursday, before the Sensex and Nifty ended the session in the red amid expiry-day volatility, as escalating Iran-US war spooked investors.
Sensex dropped more than 151 points to close at 73,832, while Nifty declined over 53 points to end the session at 23,162 on Thursday. Broader markets continued to record losses, with Nifty Midcap 100 and Nifty Smallcap 100 indices falling around 0.6% and 0.5%, respectively.
Nifty IT plunged nearly 2% to lead losses. Nifty Consumer Durables, Nifty FMCG, Nifty PSU Bank and Nifty Realty index fell around 1% each. Around 2,255 stocks declined on the NSE, while 1,013 advanced and 94 remained unchanged.
Iran-US tensions rise
US launched additional strikes against Iran, and President Donald Trump vowed even more attacks if no peace deal is secured. Trump told Fox News on Wednesday evening that the strikes would stop shortly but that he would "bomb the sh*t out of them" if Iran's leaders did not sign an agreement with the US immediately.
Iran retaliated by declaring the Strait of Hormuz closed on Thursday, saying any vessel attempting to pass through will be shot at.
Oil prices
Oil prices jumped 2% in the morning as a result of the closure of the Strait of Hormuz, a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman that handles over 20% of the world’s daily oil and gas shipments. However, they erased all gains by the afternoon.
Brent crude futures fell around 1% to trade near $92.45 per barrel, while WTI Crude futures fell more than 0.5% to trade below $90 per barrel. Rupee, meanwhile, tumbled 35 paise to 95.60 against the US dollar in early trade.
What lies ahead?
The off-and-on geopolitical drama in West Asia continues with the latest escalation in the conflict pushing Brent crude to $95 again, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He highlighted that inflation in the US has spiked to 4.2%, indicating the possibility of a rate hike by the Fed, irrespective of the Fed chief Kevin Warsh’s views on rates and what President Trump wants from the Fed. Further rise in US bond yields is likely, and this will have negative fallout on US stocks, he added.
“The weakness in US tech stocks since last Friday is likely to gather momentum. But as things stand now, this is unlikely to turn the FIIs into buyers in India, as there is very low interest by FIIs in India now. The scenario may change if there is a deep correction in AI stocks. Therefore, we will have to wait and watch the trends in AI stocks,” he further said.
The initiatives by the RBI and the government have stabilised the rupee to an extent, but this is not good enough to impart any enthusiasm in the market, according to the analyst, who believes that the weakness might linger for some time.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
