The Indian stock market indices fell on Monday, as the fear of geopolitical tension in the Middle East saw investors, especially the foreign institutional players, withdrawing over Rs 3,000 crore.
Both the Sensex and Nifty 50 fell more than 1% each to hit two-week lows. The Sensex closed at 73,399.78 points while the Nifty fell to 22,272.50 points, respectively. The fall in broader market was sharper as the BSE Midcap and BSE Smallcap indices ended 1.5% lower each.
Foreign institutional investors (FIIs) net sold shares of Rs 3,268 crore on Monday, while domestic institutional investors net bought Rs 4,762.93 crore worth of shares, according to provisional data. With this, FIIs have net sold shares worth Rs 11,208 crores or over a $1 billion in last two trading sessions.
Nine of top 10 valued firms add Rs 95,522 cr to market valuation; Reliance, TCS lead gainers IREDA shares zoom 11% on plans to raise Rs 4,500 crore via QIP, rights issue HAL set to bag another Rs 67,000 cr LCA order, stock zooms 3%, brokerages maintain ‘Buy’ Ola Electric shares jump over 16% after flat listing
The escalation of conflict in the Middle East has raised concerns over potential increase in crude oil prices. While Brent crude oil prices surpassed $91 per barrel mark intraday, it fell 1% to $89.69 per barrel bringing relief to many. Kotak Securities said the oil prices eased on the speculation that the conflict would remain contained. However, it added that in case of any retaliation by Israel, targeting Iranian military infrastructure, it would mark the beginning of a wider conflict and that might lead to sharp rise in oil risk premium.
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Any sharp uptick in crude oil prices or even a potential of such a scenario does not bode well for equities as it will fuel inflation worries, strengthening the case for the US Federal Reserve to hold interest rates higher for a longer time.
Consequently, only six Nifty 50 companies managed to end higher on Monday. Upstream oil company Oil and Natural Gas Corp topped the list of gainers as it rose nearly 6% on prospects of higher crude oil prices.
Among top losers were Larsen & Toubro, Tata Motors, Adani Ports and Special Economic Zone, Bajaj Finance, ICICI Bank, Wipro, and Shriram Finance as they fell around 2-3%.
The advance decline ratio on the BSE was the lowest in a month at 0.31 as 2,991 stocks fell as against 913 gainers. All sectoral indices on the BSE, barring oil and gas, and energy, ended lower.
“The escalation in the potential conflict between Iran & Israel is a serious development and will likely adversely impact oil pricing. The Indian markets will be pressured over the short term as well,” said Samir Bahl, CEO – Investment Banking at Anand Rathi Advisors.
Market participants expect volatility to continue in the near-term as investors will closely monitor the developments in the Middle East and assess the possibility of a June rate cut by the Federal Reserve.
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