Fresh tensions in West Asia: Indian share markets plunge, Rupee weakens further
New Delhi, July 8: Indian equity markets ended sharply lower today against the backdrop of fresh fighting between the US and Iran, which pushed up the prices of international crude oil.
Meanwhile, the Indian rupee weakened further, with the USD/INR pair climbing towards the 95.5 level as escalating geopolitical tensions boosted demand for the U.S. dollar as a safe-haven asset.
A stronger dollar also weighed on precious metals, with gold declining nearly 1.5% and silver falling more than 2.5%, as investors moved to cash and the greenback amid heightened market uncertainty.
The BSE Sensex plunged 1,677 points, or around 2.1 per cent, to close at 76,570.47, while the NSE Nifty 50 dropped 497 points, or 2.04 per cent, to settle at 23,902.64.
The sharp decline erased the gains made during the recent recovery and marked the benchmarks’ steepest single-day fall in more than two months.
The selling pressure today was broad-based, with almost all sectoral indices ending in negative territory.
Financials, information technology, auto, FMCG, oil and gas, aviation and capital goods stocks were among the worst hit as investors booked profits and cut exposure amid rising global uncertainty.
Broader markets also witnessed heavy selling, reflecting weak sentiment across the board.
The spike in oil prices raised concerns about imported inflation, a widening current account deficit and higher input costs for Indian companies, particularly as the country remains heavily dependent on crude oil imports.
These worries overshadowed domestic fundamentals and weighed heavily on investor confidence.
Foreign institutional investors remained cautious amid the heightened geopolitical risks, while domestic investors also turned risk-averse as volatility increased. The weakness in global equity markets further dampened sentiment, leading to a broad-based sell-off across sectors.
Market participants will now closely track developments in the Middle East, the trajectory of crude oil prices, foreign investment flows and the upcoming June-quarter corporate earnings for further direction.
Analysts expect volatility to remain elevated in the near term until there is greater clarity on geopolitical developments and their implications for inflation, interest rates and global economic growth. (BVI)
