Benchmark equity indices Sensex and Nifty closed lower in a volatile trading session on Tuesday as crude oil prices surged following reports of fresh US military operations in southern Iran.
The 30-share BSE Sensex dropped 479.26 points, or 0.63 per cent, to settle at 76,009.70. During intraday trade, the index had plunged as much as 579.28 points, or 0.75 per cent, to touch 75,909.68. The broader NSE Nifty also declined 118 points, or 0.49 per cent, ending the day at 23,913.70. Among the major losers on the Sensex were Bharti Airtel, Trent, Tata Consultancy Services, Bajaj Finance, Titan and HDFC Bank.
On the other hand, Tech Mahindra, Eternal, Maruti and Adani Ports managed to finish in positive territory. Brent crude, the global benchmark for oil prices, jumped 2.93 per cent to USD 98.96 per barrel, adding to concerns for equity investors. US President Donald Trump on Monday stated that negotiations with Iran aimed at ending the conflict were progressing “nicely”. However, officials indicated that any final resolution could take time because of Tehran’s complex channels of communication with its supreme leader.
“Markets initially traded with a stable undertone supported by softer crude oil prices and encouraging global cues. However, sentiment weakened sharply after reports of fresh US military strikes in Iran dashed hopes of an immediate de-escalation in West Asia. The sudden deterioration in geopolitical sentiment triggered aggressive risk-off positioning across global markets and revived concerns over fresh disruptions to energy supplies,” said Hariprasad K, Research Analyst and Founder of Livelong Wealth.
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He added that the sharp rebound in Brent crude prices once again emerged as a significant pressure point for Indian equities. “For an oil-import-dependent economy like India, rising crude prices immediately raise concerns around imported inflation, pressure on the rupee and widening fiscal stress,” Hariprasad noted.
In Asian markets, South Korea’s Kospi finished higher, while Japan’s Nikkei, Shanghai’s SSE Composite and Hong Kong’s Hang Seng closed lower.
European markets were trading mostly in the red. “Near-term optimism surrounding a possible US-Iran peace agreement faded quickly following reports of US military operations in southern Iran. This triggered a spike in crude oil prices and reversed the rupee’s brief appreciation,” said Vinod Nair, Head of Research at Geojit Investments Limited.
US markets remained closed on Monday on account of Memorial Day. According to exchange data, Foreign Institutional Investors (FIIs) purchased equities worth Rs 821.75 crore on Monday.
In the previous trading session on Monday, the Sensex had rallied 1,073.61 points, or 1.42 per cent, to close at 76,488.96, while the Nifty surged 312.40 points, or 1.32 per cent, to settle at 24,031.70.
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