Indian benchmark stock indices Sensex and Nifty declined in early trade on Thursday, tracking weak global cues and a surge in crude oil prices amid escalating tensions between the United States and Iran. Persistent foreign fund outflows and a spike in US inflation also weighed on market sentiment, analysts said.
Market Performance
The 30-share BSE Sensex dropped 358.54 points to 73,624.64 in early trade, while the 50-share NSE Nifty fell 117 points to 23,098.30. Among the Sensex constituents, HCL Tech, Infosys, Tech Mahindra, Tata Consultancy Services, Eternal, and Trent were the major laggards. On the other hand, Power Grid, ICICI Bank, Bharti Airtel, and InterGlobe Aviation emerged as gainers.
Global Factors
Brent crude, the global oil benchmark, traded 1.70 per cent higher at USD 94.68 per barrel. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,124.98 crore on Wednesday, as per exchange data.
Ponmudi R, CEO of Enrich Money, said: "Fresh military action by the United States against Iranian targets has reignited concerns over the stability of the Middle East, raising fears that recent diplomatic efforts may be losing momentum and increasing the risk of a broader regional conflict." He added that the latest US inflation data, while broadly in line with expectations, showed consumer prices rising to their highest level in three years, adding to the cautious mood.
In Asian markets, South Korea's Kospi, Japan's Nikkei 225, Shanghai's SSE Composite, and Hong Kong's Hang Seng index all traded lower. US markets ended significantly lower on Wednesday, with the Dow Jones falling over 950 points.
Analyst Views
Hariprasad K, Research Analyst and Founder of Livelong Wealth, noted: "Wall Street witnessed a sharp correction overnight, with the Dow Jones falling over 950 points. The weakness was broad-based as investors moved away from risk assets amid fears that escalating geopolitical tensions could disrupt energy markets and keep inflationary pressures elevated." He added that Asian markets reflected a similar sentiment.
"For Indian markets, the biggest concern remains crude oil. Rising oil prices not only threaten India's inflation trajectory but also add pressure on the fiscal balance, corporate margins, and the rupee," Hariprasad said.
On Wednesday, the Sensex trimmed most of its intraday gains to settle 64.42 points higher at 73,983.18, while the Nifty dipped 27.15 points to end at 23,214.95.
