India's equity markets opened sharply lower on Thursday with the BSE Sensex falling by more than 1,250 points and the Nifty50 having dipped below 25,500 as sell-off amid fear of flaring Middle East tension and hike in global oil prices sparked risk among investors.
Sensex and Nifty, Big Fall
At 2:01 PM, the Nifty50 fell below 25,300, trading at 25,285.05, down by 512 points or 1.98%. Meanwhile, the BSE Sensex dropped to 82,584.35, losing 1,682 points or 2%. By early morning trade, Sensex had cut 1,264 points or 1.5% at Rs 83,002, and Nifty50 had lost 344 points or 1.33% to 25,452. Market cap of all listed firms on BSE had shed by Rs 5.63 lakh crore and the total stood at Rs 469.23 lakh crore. This sell-off in India reflected similar developments elsewhere in Asia, as investors became more anxious of a wider regional conflict in response to Iran's missile attacks against Israel, sending jitters to the feared disruptions to oil supplies out of the Middle East, which is one of the most critical sources to global energy markets. The key drags in the Sensex pack were Reliance Industries, HDFC Bank, ICICI Bank, M&M, L&T, and Bharti Airtel. These biggies pulled the index down. What eased, however was the performance of JSW Steel and Tata Steel that opened higher. Meanwhile, the Nifty Oil & Gas index declined 1.2% through the day due to fears over a rise in petroleum products. Hindustan Petroleum was the biggest laggard on the index, followed by IOC and GSPL.
Breaking Down the Factors behind the Meltdown in Markets today
Iran-Israel Conflict: The real reason for the market plunge in the present day is the escalating Iran-Israel conflict. Israel's military confirmed that some of its soldiers were killed in Lebanon operations, thus increasing the concern that the conflict may spill into a greater war in the region.
Rising Crude Oil Prices Traders shifted positions and expected crude prices to rise in case tensions in the Middle East flared into more widespread conflict. As a result, oil prices went up due to fears that escalating tensions in the Middle East may disrupt supply chains from major oil-producing countries. Brent crude increased above $75 a barrel, while West Texas Intermediate crossed $72, with both benchmarks increasing nearly 5% in three days. Higher oil prices are particularly worrying for India, which has crude imports on a large scale, making the situation worse for Indian markets.
Another reason the market declined was due to SEBI tightening rules in the F&O segment, which further weighed on investor sentiment.
Inputs by Agencies
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