Dear
Trader…
Benchmark equity indices closed sharply lower on Thursday,
with the Sensex plunging over 1,750 points and the Nifty50 slipping to the
25,250 mark as investors trimmed their risk exposure amid escalating tensions
in the Middle East. Losses across all sectors weighed heavily on the key
indices.
The 30-share BSE Sensex dropped 1,769 points, or 2.1%, to
close at 82,497, while the broader NSE Nifty fell 493 points, or 1.90%, to
settle at 25,475.
he market capitalisation of all listed companies on the BSE
declined by Rs 9.71 lakh crore to Rs 465.15 lakh crore.Investor concerns grew
after Iran launched ballistic missiles at Israel earlier in the week, raising
fears that an escalation could disrupt oil supplies from the region.
Oil prices ticked higher on the day. A rise in oil prices is
a negative for importers of the commodity like India, as crude contributes
significantly to the country’s import bill.
Among Sensex stocks, Reliance Industries, HDFC Bank, L&T,
Axis Bank, and ICICI Bank collectively dragged the index down by 1,015 points,
with JSW Steel being the only gainer.
The Nifty Oil & Gas index closed more than 2.7% lower,
impacted by concerns over the escalating Middle East conflict.
Hindustan Petroleum, Oil India, and BPCL were the top
laggards on the index, declining by 5-7%. Meanwhile, the fear gauge, India VIX,
surged 9.86% to reach 13.17.
Here are the key factors behind today’s meltdown –
1)
Iran-Israel Clash – Indian stocks declined on Thursday amid rising
concerns over the escalating hostilities between Iran and Israel. Reports
indicate that the Israeli military has confirmed the deaths of eight soldiers,
including a team commander, during ground operations in southern Lebanon.
This escalation follows Iranian missile attacks
targeting Tel Aviv, with Israel’s military chief warning of an imminent
response.
2)
Rise in crude oil prices – Oil
prices increased amid concerns that escalating tensions in the Middle East
could threaten supplies from major producers. Brent crude briefly surpassed $75
per barrel, while West Texas Intermediate topped $72, with both benchmarks
rising nearly 5% over the past three days.
A rise in oil prices is a negative for importers of the
commodity like India, as crude contributes significantly to the country’s
import bill.
3)
Sebi tightens F&O measures – The recent decision by market regulator Sebi to tighten rules in the
futures and options (F&O) segment has also contributed to the decline in
equity markets today. Analysts stated that these new measures, which include
limiting weekly expiries to one per exchange and increasing contract sizes, may
dampen retail sentiment and reduce trading volumes.
This uncertainty around trading dynamics has likely fueled
investor concerns, adding to the market’s downward pressure amid broader
geopolitical tensions.
4)
China factor – Investors in India are
increasingly worried about the resurgence of Chinese stocks, which have
underperformed in recent years. Following the announcement of economic stimulus
measures by the Chinese government last week, analysts predict sustained growth
in Chinese stocks, prompting a potential outflow of funds from India.
The SSE Composite index rose 8% on Tuesday and
has gained over 15% in the past week. As a result, foreign institutional
investors have withdrawn Rs 15,370 crore from Indian equities in the last two
trading sessions.
Nifty futures opened at 25969 points against the previous
close of 25670 and opened at a low 25440 points. Nifty Future closed with an
average movement of 378 points and rise of around 493 points and closed 25475 points…!!
Meanwhile,
The domestic market took a sharp downturn
following Iran’s launch of ballistic missiles at Israel, sparking fears of
retaliation and escalation in war. This could potentially drive up oil prices
and lead to inflationary pressures.
The situation will change if Israel attacks any oil
installations in Iran which will trigger a huge spike in crude. If it happens,
it can turn out to be more damaging for oil importers like India. Therefore,
investors should watch the emerging situation very closely.
With attractive valuations in China, FIIs have redirected
their funds, adding pressure on Indian stocks.
Technically, the
important key resistances are placed in Nifty future are at 25475 levels, which
could offer for the market on the higher side. stainability above this zone
would signal opens the door for a directional up move with immediate
resistances seen at 25505 – 25606 levels. Immediate support is placed at 25303 –
25180 levels.
Past Performance is not an Indicator of Future Returns. The
securities quoted are for illustration only and are not recommendatory. Investment
in securities market are subject to market risks. Read Disclaimer and related
all the documents carefully before investing, mentioned on www.nikhilbhatt.in
