Sensex Plunges 1,100 Points, Nifty Nears 24,850 Amid Market Turmoil Linked to West Asia Conflict

Market Update: Indian Indices Slip 1.3% Amid Rising Crude Prices and Conflict Uncertainty

Sensex and Nifty indices fell over 1.3% on Monday, weighed down by rising crude prices and investor sentiment impacted by the ongoing conflict in West Asia.

Key Figures:

• Sensex: Down 1,097.69 points or 1.35% at 80,189.50
• Nifty: Down 332.60 points or 1.32% at 24,846.05
• Brent Crude Futures: Surged over 7% to $82.40 a barrel, the highest in 14 months

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The broader market indices, including small-caps and mid-caps, fell 0.8% each. Major sectors, excluding metals, logged losses, with oil marketing companies, paint and tyre makers, aviation companies, and chemical manufacturers being among the worst-hit.

The conflict in West Asia has triggered a flight to safe havens, pushing up crude prices and weighing on investor sentiment. Tehran's closure of navigation through the Strait of Hormuz, which accounts for nearly 20% of global oil flows and over 40% of India's crude imports, has deepened uncertainty for the global economy.

Market Outlook:

• Energy Risk: A sharp spike in crude prices by 20% is likely only if the Hormuz Strait is closed, obstructing oil transport through the strait.
• Impact on Equities: If Brent Crude remains around $76, equity markets may remain weak but are unlikely to witness a big crash.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Expert Insights:

• VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited: Investors should refrain from selling and watch how things evolve, as past crises have shown that market impact is short-lived.
• Rajeev Sharan, head of criteria, model development and Research at Brickwork Ratings: The conflict premium will ease only when there is assurance that vital oil routes such as the Strait of Hormuz remain open.

Currency and Bond Market:

• Indian Rupee: Depreciated against the dollar while government bond yields rose after U.S., Israel strikes on Iran raised the risk of protracted conflict in the Middle East.
• FII Selling: Foreign investors net sold Rs 7,536.4 crore worth of Indian equities on Friday, February 27.
• VIX Surges: India VIX, the volatility gauge, rose over 15% to trade at 15.78.