Indices decline 1% amid rising crude prices and geopolitical tensions

Time of India

2 days ago

Indian equity markets experienced a 1% decline on Thursday, triggered by escalating tensions in West Asia and the subsequent surge in crude oil prices. Geopolitical uncertainty, coupled with a plane crash, dampened investor sentiment, leading to significant selling pressure from foreign portfolio investors. While domestic institutions provided some support, broader market indices reflected the prevailing caution.
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Mumbai: India's equity indices shed 1% on Thursday as a flare-up in tensions in West Asia and a resultant rebound in crude prices soured investor sentiment.The US on Wednesday withdrew personnel from West Asia, citing heightened security risks in the region, which resulted in Brent crude futures rising by 4% before they pulled back on Thursday. According to news reports, Israel is preparing to mount an attack on Iran, a move that is seen as destabilising the Middle East.The Sensex fell 823 points to close at 81,692. The Nifty declined 253 points to end at 24,888."The market was already weak in the morning today because of the geopolitical tensions, but the sharper sell-off happened after the unfortunate plane crash in the afternoon. Though there is no direct correlation, that had an impact on sentiment," said Siddarth Bhamre, head of institutional research at Asit C Mehta Investment Intermediates. Foreign portfolio investors continued to sell, dumping shares worth ₹3,831 crore on Thursday. Domestic institutions were buyers of ₹9,394 crore. The flows from local institutions included the purchase of Asian Paints in the block deal that was transacted on Thursday.Elsewhere in Asia, China ended almost flat, Hong Kong fell 1.4% and Taiwan dropped 0.8%. South Korea rose 0.5%. The pan-Europe index Stoxx 600 was down 0.6% at the time of going to print.At home, NSE's Volatility Index, or VIX, firmed up 2.5% to 14, reflecting the caution in the market. The next major support for the Nifty is at 24,700, while 25,000 could be a hurdle for the index.Nifty Midcap 150 dropped 1.5% and Nifty Small-cap 250 fell 1.4%. Of the 4,151 shares traded on BSE, 2,780 declined, while 1,226 advanced."There is a fair bit of rotation happening between small-cap, mid-cap and large-caps as investors are looking to churn at every opportunity available," said Bhamre.Hemang Jani, director, Finazenn - an investment advisory, does not see this as a start of a trend reversal."Broadly, there are no major downside risks in the market unless geopolitical risks escalate," he said.