Escalating conflict between Iran and Israel triggers market turmoil, with analysts cautioning against potential broader repercussions.
In a tumultuous start to the week, benchmark stock market indices witnessed a sharp decline on Monday, fueled by escalating tensions in the Middle East following Iran’s retaliatory attack on Israel over the weekend.
Market Reaction to Geopolitical Unrest
Investor sentiment took a hit as concerns mounted over the possibility of a wider regional conflict, sending shockwaves through Dalal Street. The S&P BSE Sensex plummeted by 644.52 points to 73,600.38, while the NSE Nifty50 witnessed a substantial decline of 186.80 points, sliding to 22,332.60 at 9:20 am.
Sectoral Fallout
The broader market indices mirrored the downturn, with most major sectoral indices trading in the red. Notably, high-weightage sectors such as Nifty Bank and Nifty Financial Services bore the brunt, each experiencing declines of over 1%. However, Nifty IT bucked the trend, edging up by 0.3% buoyed by Tata Consultancy Services’ robust Q4 earnings performance.
Stocks in Focus
Amidst the sea of red, only a handful of stocks managed to stay afloat on the Nifty50. Notable gainers included Hindalco, ONGC, TCS, Nestle India, and HCLTech, while the rest languished in negative territory. Oil and gas companies, particularly BPCL and Coal India, faced significant downward pressure amidst the prevailing uncertainty.
Analysts’ Perspectives
Expressing apprehension about the potential impact on domestic markets, Manoranjan Sharma, chief economist at Infometrics Ratings, highlighted the looming threat of further escalation and retaliatory strikes by Israel. The uncertainty surrounding the conflict has injected heightened volatility into global stock markets, Sharma remarked.
Shrey Jain, Founder and CEO of SAS Online, echoed similar concerns, emphasizing the critical role of Israel’s response and the reaction from the G7 nations. Any escalation in the conflict could trigger a surge in crude oil prices, subsequently elevating inflationary pressures and dimming prospects for rate cuts, Jain cautioned, impacting the valuations of Indian equities.
