Indian equity benchmarks opened sharply lower on Monday, continuing last week’s risk-off mood, as escalating geopolitical tensions in the Middle East spooked investors across the world. Fresh fears of another Israel-Iran conflict, after the US was said to have hit Iranian nuclear facilities with cruise missiles over the weekend, put a cloud over market players, triggering a down day across the board. At 10:31 AM IST, the Nifty 50 index was trading deep in red at 24,894.25, down more than 218 points or over 0.87% from its close of 25,112.40 yesterday. Just like Australian markets, Indian shares tumble as the BSE Sensex index slides more than 700 pts to 81,699.75 vs Friday’s close of 82,408.17. Market breadth was truly ugly with over 3 times as many decliners as advancers.
India VIX, the market’s volatility index, soared upwards of 5.5%, signaling a level of investor spook and greater anticipated market volatility. That retreat was largely an overreaction to the sharp increase in tensions in the Middle East that shook markets worldwide. Even just reports of US involvement in this kind of strike on Iranian nuclear facilities have raised the alarm of retaliation by Tehran, including against vital energy infrastructure or against global oil and gas traffic through the Strait of Hormuz. This short-term concern over potential supply shortages drove up Brent crude oil prices, which were trading over $78.96 per barrel, more than $2 per barrel over Friday prices. Second, the increase in crude oil prices is a clear negative for net oil importing India, because it exacerbates inflationary pressures. Sectoral Performance & Key Movers 61 Respondents noted that the sell-off was broad-based across sectors.
The Nifty IT index was one of the worst affected, closing over 1% lower. This is indicative of international worries about an extended period of weakness in technology spending, fears that have been heightened by recent news from the world’s largest IT consulting firms of a collapse in new outsourcing contracts. Similarly, other key indices like Nifty Bank, Financial Services, Auto, FMCG, and Consumer Durables opened weak in the range of 0.5% to 1%, indicating a firm profit-booking and risk aversion sentiment. This included heavyweights such as Infosys, HCL Technologies, Tata Consultancy Services (TCS), Reliance Industries, HDFC Bank, and IndusInd Bank, all adding strongly to indices’ downside drag. These heavyweights, usually bellwethers of bullish or bearish market sentiment, succumbed to selling pressure.
In a notable shift from the general market direction, defense stocks became clear relative outperformers. The Nifty India Defence index was on the rise, with Paras Defence, Garden Reach Shipbuilders, Data Patterns, and Bharat Electronics (BEL) stocks holding strong. This was largely the result of expectations for ongoing government support for increased defense spending and a recent hop of positive news order wins on the flow front for these companies. International Cues and Macro Indicators Asian markets largely mirrored the global fear on Monday.
South Korea’s Kospi, Japan’s Nikkei 225 index, and Hong Kong’s Hang Seng were all trading lower in early trade, though China’s Shanghai Composite Index opened with a small gain. US stock-index futures were down in early Asian trading suggesting a weak opening for the US markets later today. In terms of currency, the Indian Rupee (INR) depreciated against the US dollar, hovering at ₹86.66/US$. This depreciation was largely driven by the spike in international crude oil prices and heightened safe-haven demand for the dollar during the geopolitical crisis. On the institutional front, Foreign Institutional Investors (FIIs) were net buyers on Friday, June 20, pumping ₹7,940.70 crore into Indian equities after a few days of erratic buying and selling. Domestic Institutional Investors (DIIs) were net sellers on Friday, selling shares worth ₹3,049.88 crore. In short, this counter-balancing act between FIIs and DIIs is certainly one to watch. Today’s somewhat knee-jerk market reaction indicates global factors are for now ruling the day in terms of sentiment.
Also check:- Indian Markets Rebound, Nifty Tops 25,000 Amid Easing Geopolitical Tensions
Interestingly today is a noteworthy Sensex rejig, with Trent and Bharat Electronics (BEL) replacing Nestle India and IndusInd Bank. This change will come into effect just in time to set off passive inflows into the incoming stocks and outflows from the outgoing ones, making for another layer of dynamics in today’s trading. Reproductive coercion has been defined as a form of birth control sabotage that involves “the use of threats, intimidation or force to maintain control over a person’s reproductive functions.” Contraceptive justice is a movement-oriented around dismantling systems of oppression that enforce reproductive control.
According to market experts, today’s market outlook calls for consolidation and increased volatility. On the downside, the Nifty has near-term support at about 24,840 and then around 24,750. A decisive break beneath these prices would likely indicate more downside to come. For investors, the immediate backdrop will continue to center on the unfolding geopolitical crisis in the Middle East and how it could shake up global oil prices. Corporate earnings, inflation data, and direction of the Rupee will be in focus. Investors are encouraged to stay skeptical and watchful in this tumultuous worldwide landscape.
