MUMBAI: Escalating tensions in West Asia rattled global markets, sending crude prices soaring and the Indian rupee to new lows. The BSE Sensex lost another 1,456 points (1.9%) on Tuesday, closing below the 75,000 mark at 74,559 points.
Sharp Losses in Two Sessions
In just two sessions this week, the Sensex has lost nearly 2,800 points, or over 3%. Over four sessions since May 7, the loss has been almost 3,400 points, or 4.4%. Investors' wealth, measured by BSE's market capitalisation, has dropped from a recent high of Rs 475 lakh crore on May 7 to about Rs 456 lakh crore, a loss of Rs 19 lakh crore.
Foreign Fund Outflows Slow but Persistent
Although selling was strong and across-the-board, a relatively positive development was the comparatively lower net foreign fund outflow at Rs 1,959 crore, according to BSE data. In contrast, on Monday, despite the Sensex losing 1.7%, net foreign fund outflows stood at Rs 8,438 crore.
Crude oil prices surged above $105 per barrel, adding to the pressure on the rupee and foreign portfolio investor (FPI) sentiment. Siddhartha Khemka of Motilal Oswal Financial Services said domestic markets extended losses for the fourth consecutive session due to a lack of progress in US-Iran negotiations, creating nervousness across global markets. "Escalating tensions in West Asia have heightened fears of a prolonged geopolitical conflict, keeping investors risk-averse and triggering sustained selling across financial markets," he said.
Market Outlook
"Unless there is any meaningful progress in negotiations, volatility and weakness in domestic equities are likely to persist," Khemka added. On Tuesday, of the 30 Sensex stocks, 29 closed in the red, with SBI being the only marginal gainer. HDFC Bank, ICICI Bank, Reliance, and Infosys contributed the most to the day's loss.
The continued uncertainty in West Asia and its impact on crude prices and foreign flows remain key concerns for investors.
