Domestic equity benchmarks faced a significant decline on Monday, with both Sensex and Nifty dropping around 2% each due to weak global cues following stalled peace talks between the US and Iran. Sensex plummeted by 2.16%, losing 1,675 points to reach 75,874.85, while Nifty traded at 23,555, down approximately 500 points or 2.05%. The selling pressure primarily affected banking and financial, realty, auto, and energy stocks.
Eicher Motors, Maruti Suzuki, Shriram Finance, Bajaj Finance, and HDFC Bank were among the top losers in the market. All sectoral indices were in the negative territory. Small-cap indices witnessed the most significant drop, with the Nifty Smallcap 100 and Nifty Smallcap 250 trading 2% lower, following declines in midcap and large-cap stocks.
Analysts noted a shift towards risk aversion in global sentiment due to escalating geopolitical tensions. The situation is crucial as the Hormuz route plays a vital role in global oil supply. Crude oil prices, which had previously dropped to the $94–100 range from above $110, have now surged back above $105, raising concerns about inflation and macroeconomics.
The implications for India are immediate and substantial, given its heavy reliance on the Hormuz route for over 85% of crude oil imports. Rising oil prices could potentially impact the current account deficit, weaken the rupee, and elevate inflation expectations. Analysts anticipate continued high volatility throughout the week, driven by geopolitical developments, inflation data, and earnings announcements.
In the commodity markets, Brent crude futures were trading at $103.40 per barrel, marking an 8.61% increase, while US WTI crude saw a jump of 9.38% to $105.63. Across Asian markets, major indices were in the negative zone, with the Nikkei, Hang Seng, and KOSPI all experiencing declines. Wall Street closed with a mixed performance, as the S&P 500 ended 0.11% lower, while the Nasdaq finished 0.35% higher.
