Iran-Israel flashpoint causes rout as Sensex, Nifty fall

Bengaluru: Indian indices fell sharply on Monday, eroding Rs 5.19 lakh crore of investors’ wealth on the Bombay Stock Exchange, as escalating conflict in the Middle East hurt market sentiments.

The 30-share BSE Sensex fell 845.12 points or 1.14 per cent to settle at 73,399.78 on Monday. During intra-day trading, it fell 929.74 points (1.25 per cent) to 73,315.16. The market capitalisation of BSE-listed companies fell by Rs 5.19 lakh crore to Rs 3.94 lakh crore. Meanwhile, the Nifty on the National Stock Exchange declined 246.90 points or 1.10 per cent to settle at 22,272.50.

“Geopolitical tensions and higher-than-expected US inflation impacted investor sentiment and dragged the indices to a lower note. The major casualties were the mid- and small-cap indices due to their rich valuation and expectation of moderation in earnings growth,” said Vinod Nair, head of research at Geojit Financial Services.

This was echoed by other analysts. “Geopolitical tensions and inflationary headwinds in the western world have led to pressure on equity markets worldwide. While India is relatively better placed, higher crude oil prices are a significant dampener,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.

From the Sensex basket, Wipro, Bajaj Finserv, ICICI Bank, Larsen & Toubro, Bajaj Finance, Tata Motors, Tech Mahindra and HDFC Bank were the major laggards. In the broader market, the BSE smallcap index declined 1.54 per cent and midcap index dipped 1.50 per cent.

After Iran’s massive missile and drone attack on Israel over the weekend, global leaders scrambled to ensure that the conflict does not escalate. 

Experts believe that the sell-off in the Indian markets will not be sustained due to strong domestic economic fundamentals and the January-March quarter earnings season, which kicked off late last week.

“The European market opened on a positive note while oil prices inched lower as market participants expected that the diplomatic efforts were likely to de-escalate tensions in the Middle East,” said Geojit’s Nair.

“India’s strong domestic macroeconomic fundamentals and the robust foreign institutional investor (FII) inflows are expected to provide support to domestic equities. While an environment of high volatility is anticipated, Nifty is likely to find support around the crucial 22,000-21,850 zone, bolstered by these factors,” said Sugandha Sachdeva, founder of SS WealthStreet.

Sachdeva added that the evolving geopolitical landscape, coupled with the ongoing earnings season, is expected to further influence market trends in the near term.