Sensex declined around 800 points to 75,288 while the Nifty 50 dropped 270 points to 23,400, as seen at 9.52 am. The sharp selloff wiped off nearly Rs 3.31 lakh crore from the total market capitalisation of all companies listed on BSE, pulling it down to Rs 437 lakh crore.
L&T, Tata Steel, UltraTech Cement, IndiGo, HDFC Bank and Tech Mahindra were among the top losers on Sensex, falling 2-3. Power Grid, ITC and Hindustan Unilever were among the very few gainers.
All sectoral indices on NSE opened in the red, except Nifty FMCG which was trading in the green with marginal gains. Nifty Metal was the top loser, falling around 2%. On NSE, 568 stocks advanced, while 1,953 declined and 70 remained unchanged.
Here are the key factors weighing on markets today
1) Iran-Israel war rages on
Despite bleak assurances by the US administration, the war in the oil-rich Middle East continued to escalate. Leaders of Iran, Israel and the US have vowed to fight on as war approached the two-week mark on Friday.
An Iranian drone reportedly struck fuel storage facilities near Bahrain International Airport on Muharraq Island, triggering massive fire. Hostilities were seen in other parts of the oil-rich region as well.
2) Oil jumps back above $100Crude impact
Crude oil prices surged back above the $100-mark as the war between Iran and Israel-US showed no sign of resolution, with Iran’s new supreme leader warning that the Strait of Hormuz will continue to remain shut for traffic.
Mojtaba Khamenei, Iran’s new supreme leader and son of Ayatollah Khamenei, called the Strait of Hormuz a strategic “tool of pressure” that must remain shut amid the war. In a message on state television, Mojtaba Khamenei warned that US bases across the region can face attacks as Iran seeks revenge for the deaths caused by the conflict.
Oil prices soared as a result of rising expectations of continued closure of the Strait of Hormuz, which remains a critical chokepoint for trade. The narrow 33-kilometre long waterway connects the Persian Gulf and the Gulf of Oman, and carries over 20% of the world’s oil and gas shipments.
Brent crude futures gained nearly 0.7% to $101.1 per barrel, while ETI Crude gained around 0.6% to $96.29 per barrel, as seen at 8.30 am IST. The crude oil prices crossed the key psychological mark of $100 on Monday for the first time since Russia’s invasion of Ukraine back in 2022. Oil prices cooled down later, falling below the $90 mark on hopes of a sooner end to the raging war. However, the prices have again soared on the back of rising hostilities and sharp warnings from Tehran’s new leadership, which has threatened that prices may soar to as high as $200 per barrel.
Notably, today’s rise in prices comes despite US President Donald Trump-led administration issuing a 30-day license for countries to buy Russian oil and petroleum products. Additionally, US Energy Department had said that the country would be releasing 172 million barrels of oil from the strategic petroleum reserve in an effort to curb sky-rocketing oil prices, as part of the broader commitment by the International Energy Agency to release 400 million barrels of oil.
3) Global markets
Global markets remained broadly in the deep red, with Japan’s Nikkei 225 and South Korea’s Kospi falling more than 1% each. Hong Kong’s Hang Seng and China’s Shanghai Composite were down 0.55% and 0.25% respectively, as seen at 8.45 am IST.
Wall Street and European markets opened the previous session with deep cuts. S&P 500 declined more than 1.5%, while Nasdaq tumbled 1.8%. UK’s FTSE fell 0.5%, Germany’s DAX declined 0.2% while France’s CAC fell 0.72%.
4) Rupee nears all-time low
The Indian rupee is nearing all-time low, falling 9 paise to 92.34 against the US dollar in early trade. The Indian currency has seen a significant decline recently, falling to an all-time low of 92.3575 against the US dollar on Thursday before recovering some losses. Oil movements remain a key driver for the rupee, which tends to widen India’s import bill and weigh on the currency, said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities
“For now, the expected trading range for the rupee is 91.45–92.75,” the analyst said, adding that market participants will closely watch US initial jobless claims and US GDP data.
5) Bond yield rises
Two-year US treasury yields hit a six-month high on Thursday as Iran increased its attacks on energy and transport targets in the Gulf, sparking a rally in oil prices and stoking concerns about resurgent inflation that could keep US interest rates higher for longer. The yield on benchmark U.S. 10-year notes rose 4.9 basis points to 4.255%, the highest since February 5.
6) FII selling continues for 10th day
Foreign investors remained net sellers of Indian equities for the tenth consecutive session on Thursday, net selling shares worth nearly Rs 7,050 crore. FIIs have so far sold Indian equities worth around Rs 57169 crore over these ten sessions till Thursday.
While this doesn’t reflect their trading behaviour today, persistent selling by foreign investors seen for the past several sessions dampens investor sentiment.
What should investors do?
With the heightened uncertainty surrounding the West Asian conflict continuing, globally markets are weak and in uncharted territory, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. “Weakness in the US markets indicates that the rebound in the market is some time away. With Brent crude around $100, bulls are on the defensive. With the FIIs persisting with their sustained selling strategy, even largecap bluechips are under pressure,” he added.
The one sector that is weathering the storm is pharmaceuticals, Vijayakumar said. “This sector is not impacted by external headwinds. In fact rupee depreciation is a positive for the sector, which is a major exporter. It appears that portfolio churns are happening in favour of pharmaceuticals,” he added.
“There is nothing much investors can do in this challenging times other than remaining calm and continuing with systematic investment,” according to the analyst.
Technical view
Nifty 50 has formed a high wave candle with a lower high and a lower low signaling continuation of the downward bias, Bajaj Broking said. It noted that the index closing below Monday’s low on Thursday highlighted extension of the decline. “Bias remains down and the index is likely to extend the current decline towards the 23,200 levels in the coming sessions,” it said.
“On the upside, immediate resistance is placed around 24,000 and 24,300, which also coincides with the recent breakdown zone, and only a sustained move above 24,300 could indicate a pause in the prevailing downtrend. Market volatility is also expected to remain elevated due to uncertain global cues, rising crude oil prices, and escalating geopolitical tensions,” the domestic brokerage added.