Indian equity benchmarks extended losses for the second straight session on Monday, dragged down by heightened geopolitical tensions in West Asia. The BSE Sensex plunged 523 points, or 0.66%, to settle at 79,050, while the NSE Nifty declined 152 points, or 0.63%, to close at 24,055.
Market Performance
The sell-off was broad-based, with all sectoral indices ending in the red. The worst hit were banking, auto, and metal stocks. The Nifty Bank index fell 0.9%, while the Nifty Auto and Nifty Metal indices dropped 0.8% and 1.2%, respectively.
Among the top losers on the Sensex were Mahindra & Mahindra, Tata Steel, and ICICI Bank, which fell between 1.5% and 2%. On the other hand, Hindustan Unilever, Nestle, and Dr Reddy's Laboratories managed to stay afloat, posting marginal gains.
Geopolitical Concerns
The escalation of conflict in West Asia, particularly the intensifying hostilities between Israel and Iran-backed forces, has spooked global markets. Crude oil prices surged over 3% on fears of supply disruptions, adding to inflationary pressures. The benchmark Brent crude futures climbed above $78 per barrel.
Investors are also wary of the potential impact on India's trade and energy imports. India imports about 85% of its crude oil requirements, and any sustained rise in oil prices could widen the current account deficit and stoke inflation.
Global Cues
Asian markets traded lower, with Japan's Nikkei and Hong Kong's Hang Seng indices falling 1.5% and 1.2%, respectively. European markets also opened in the red, as investors fled riskier assets.
Back home, foreign institutional investors (FIIs) remained net sellers, offloading shares worth Rs 1,200 crore in the cash market, according to provisional data. Domestic institutional investors (DIIs) bought shares worth Rs 800 crore, providing some support.
Technical View
Analysts said the Nifty has broken below its 50-day moving average, signaling further weakness in the near term. The index is likely to find support at 23,800, while resistance is placed at 24,300.
"The market is in a corrective phase, and the ongoing geopolitical crisis is adding to the volatility. We advise investors to remain cautious and avoid aggressive buying until the situation stabilizes," said a market expert.
The broader market also witnessed selling, with the BSE Midcap and Smallcap indices shedding 0.7% and 0.5%, respectively. The overall market capitalization of BSE-listed firms eroded by about Rs 1.5 lakh crore.
Outlook
Market participants will now watch for any diplomatic developments in West Asia and the outcome of the upcoming US Federal Reserve meeting for cues. The Fed is widely expected to keep interest rates unchanged, but any hawkish commentary could further dampen sentiment.
