west-asia-crisis-sensex-drops-364-points

Indian benchmark equity indices ended lower on Thursday as escalating geopolitical tensions in West Asia and a sharp rise in global crude oil prices dampened investor sentiment, triggering broad-based selling across sectors. Concerns that higher energy prices could fuel inflation, weaken corporate profitability and keep global interest rates elevated weighed heavily on market participants throughout the trading session.

The BSE Sensex declined 363.66 points, or 0.47 per cent, to close at 76,391.39, while the NSE Nifty50 fell 126.65 points, or 0.53 per cent, to settle at 23,869.60. Both benchmark indices traded in negative territory for most of the session as investors turned cautious amid growing uncertainty in global financial markets.

Analysts said the surge in crude oil prices following renewed tensions in West Asia was the primary factor influencing market sentiment. Brent crude climbed by more than 4 per cent during the day to trade around USD 98.10 per barrel, nearing the psychologically significant USD 100 mark and raising concerns about the impact on oil-importing economies such as India.

Vinod Nair, Head of Research at Geojit Investments Limited, said rising oil prices have prompted investors to reassess inflation risks and the outlook for corporate earnings.

"With crude oil prices approaching USD 100 per barrel amid concerns over further disruptions to global energy supplies, investor sentiment remained subdued as markets reassessed inflation risks and corporate margins," Nair said.

He noted that recent macroeconomic indicators suggest prolonged geopolitical tensions are beginning to affect the domestic economy. According to him, the impact is already visible in rising wholesale price inflation (WPI) and a moderation in business activity across several sectors.

Nair added that elevated energy prices have strengthened expectations that major global central banks could maintain higher interest rates for a longer period, reducing the attractiveness of emerging markets such as India for foreign investors.

Market participants remained cautious as concerns over imported inflation, higher transportation costs and pressure on corporate profit margins outweighed positive domestic earnings announcements.

Selling pressure was witnessed across most sectors, although automobile stocks emerged as a notable exception after several companies reported encouraging quarterly financial results. Analysts said investors continued to favour companies with resilient earnings growth, strong balance sheets and better visibility on future profitability.

Among the sectoral indices on the National Stock Exchange (NSE), Nifty Auto gained 0.50 per cent, supported by buying interest in leading automobile manufacturers, while Nifty Media rose 0.93 per cent.

Most other sectoral indices ended in negative territory. Nifty PSU Bank declined more than 1 per cent amid weakness in public sector banking stocks. Nifty Metal lost 0.97 per cent as investors booked profits in metal companies, while Nifty Pharma fell 0.43 per cent. Nifty FMCG declined 0.63 per cent and Nifty Consumer Durables slipped 0.56 per cent as broader market sentiment remained weak.

Among individual stocks, SBI Life Insurance, Bajaj Auto, Mahindra & Mahindra (M&M), and Tata Consultancy Services (TCS) were among the top gainers on the benchmark indices. On the losing side, Adani Enterprises, Nestle India, Shriram Finance and Adani Ports were among the biggest drags on the market.
Currency markets also reflected the cautious mood. The Indian rupee came under pressure during the trading session as higher crude oil prices increased demand for the US dollar from oil importers while continued foreign fund outflows added to the weakness.

 

Also read: Rural tap water coverage crosses 82 pc under Jal Jeevan Mission

The rupee was trading at around Rs 96.54 against the US dollar on Thursday. Commenting on the currency movement, Dilip Parmar, Senior Research Analyst at HDFC Securities, said the domestic currency reversed its early gains and weakened sharply as global risk aversion intensified.

"The Indian rupee pulled off a sharp U-turn, erasing its early morning gains as surging crude oil prices and global risk aversion crushed the local currency's momentum. Deepening geopolitical anxieties, relentless foreign capital flight from domestic equities, and high dollar demand from local importers have created structural pressure on the rupee," Parmar said.

He added that technical indicators suggest the USD/INR pair remains on a strong upward trajectory. "Looking at the charts, the spot USDINR pair is holding firmly above its newly elevated support level of 96.10, with buyers eyeing a move towards the 97 mark," he said.

 

Despite weakness in Indian equities, several Asian markets ended the day with gains. Japan's Nikkei 225 advanced 0.38 per cent, Hong Kong's Hang Seng Index rose 1.16 per cent, Taiwan's Weighted Index edged up 0.06 per cent, while South Korea's KOSPI outperformed the region with a sharp gain of 4.22 per cent.

 

Analysts said Indian markets are likely to remain sensitive to developments in West Asia, fluctuations in global crude oil prices, foreign institutional investor flows and upcoming corporate earnings. Investors will also closely monitor global inflation trends and central bank policy signals, as any further escalation in geopolitical tensions or sustained rise in crude prices could increase volatility across financial markets in the coming sessions.