Heavy sell-off in the Indian stock market due to Middle East tension and expensive crude oil; Sensex falls over 600 points. Know the 6 major reasons.
On Monday, the first trading day of the week, the Indian stock market witnessed a significant decline. The direct impact of rising tensions between the US and Iran affected market sentiment, leading to dominant selling pressure among investors.
The market showed signs of a major fall right from the early trade. Most sectoral indices were trading in the red, indicating weak market sentiment.
On Monday, the BSE's 30-share benchmark index, Sensex, opened with a huge gap down of 606 points at 76,963.35.
At 9:28 AM, it was seen trading with a loss of 617 points. Meanwhile, the National Stock Exchange's (NSE) Nifty was trading at 24,023, down by 182 points or 0.75%.
Regarding sectoral indices, almost all sectors except Media were in the red during early trade.
Nifty Auto saw a decline of 0.89%, Nifty FMCG by 0.44%, Nifty Metal by 0.83%, and Nifty Pharma by 0.44%.
Additionally, Nifty Private Bank was trading weaker by 0.51%, Nifty Realty by 0.59%, Nifty Healthcare by 0.50%, and Nifty Oil & Gas by 0.33%.
According to market experts, several domestic and international factors are responsible for today's decline. Let's understand these 6 key reasons in detail.
The situation in the Middle East is once again deteriorating. The cycle of attacks and retaliatory actions between the US and Iran has intensified.
Iran has increased its attacks in the Gulf countries, while the US has also launched new military strikes. The temporary peace between the two nations had provided some relief to the market, but now the situation has become tense again. This has directly impacted investor sentiment.
Amidst rising tensions, Iran has claimed to have closed the Strait of Hormuz, one of the world's most important maritime routes.
A large portion of global oil and gas passes through here. Although the US says the route is still open, this uncertainty has shaken the oil market.
The price of Brent crude rose by about 4% to around $79 per barrel, while WTI crude crossed $74 per barrel. If oil remains expensive for a long time, it could increase pressure on India's import bill.
The impact of the surge in crude oil prices was also clearly visible on the Indian currency. On Monday, the rupee opened at 95.70 against the dollar, weakening by about 0.40%.
It had closed at 95.32 in the previous trading session. Experts believe that investors will also be watching for the US inflation data due next week.
The market's worries are not limited to the Middle East. Government bond yields in the US have also risen sharply.
The 10-year US Treasury yield has increased to 4.585%. When returns on bonds increase, many investors prefer to move their money from the stock market to bonds, creating additional pressure on the equity market.
On Monday, it wasn't just the Indian market; most Asian stock markets were also trading in the red.
South Korea's Kospi plunged by more than 7%, while Japan's Nikkei fell by about 2%. China's Shanghai Composite was down by nearly 1.5%. Hong Kong's Hang Seng was also seen trading with losses.
Profit-booking is also considered a major reason for the market's fall. In the last two trading sessions, the Sensex had gained about 1,066 points and the Nifty 325 points.
Thus, many investors sold their shares to take advantage of this rise. When the global environment is already weak, such profit-booking intensifies the fall.
*Edit with Google AI Studio
जोगेन्द्र सिंह शेखावत
