Benchmarks plummet 2% amid intensifying war in West Asia

Market benchmark indices Sensex and Nifty ended nearly 2 per cent lower on Wednesday after a day’s breather as a spike in global crude oil prices amid growing tensions in West Asia unnerved investors. Besides, sustained foreign fund outflows and selling in blue-chip bank stocks added to the pressure, traders said.

The 30-share BSE Sensex tumbled 1,342.27 points or 1.72 per cent to settle at 76,863.71. During the day, it dropped 1,446.72 points or 1.84 per cent to 76,759.26. A total of 2,380 stocks declined. while 1,881 advanced and 153 remained unchanged on the BSE. The 50-share NSE Nifty tanked 394.75 points or 1.63 per cent to end at 23,866.85.

“Investor sentiment remained fragile as escalating geopolitical tensions in the Middle East continued to unsettle global markets and push volatility higher. “Concerns over potential disruptions to crude oil supply, rising inflationary pressures, and the possible impact on economic growth kept participants cautious. Additionally, continued foreign institutional investor selling and weakness in the rupee further dampened risk appetite,” Ajit Mishra SVP, Research, Religare Broking Ltd, said.

Bajaj Finance was the biggest drag in the Sensex pack, sliding 5.01 pr cent, followed by Axis Bank, Bajaj Finserv, Mahindra & Mahindra, Maruti, Trent, Bharti Airtel and Kotak Mahindra Bank. On the other hand, Sun Pharma and NTPC were the only gainers.

“...markets resumed their downward trajectory after a brief rebound in the previous session, as persistent foreign fund outflows and selling in banking, financial services and automobile stocks weighed on benchmark indices,” Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.

The BSE midcap select index tanked 1.55 per cent, and the smallcap select index declined 0.61 per cent. The auto index declined about 3 per cent as the sector continued to face multiple headwinds, including higher raw material costs and persistent supply chain challenges, particularly semiconductor shortages affecting production, Khemka said.

Among BSE sectoral indices, auto tumbled 3.06 per cent, bankex (2.06 per cent), Private Banks index (2.03 per cent), BSE Top 10 Banks (2.03 per cent), financial services (1.99 per cent), consumer discretionary (1.89 per cent) and PSU Bank (1.87 per cent). In contrast, BSE energy, healthcare, utilities, oil & gas and power were the gainers.

“Indian equity markets witnessed a sharp sell-off today as heavy profit-booking wiped out the gains from the previous bullish session, reflecting growing caution among investors amid persistent global uncertainties. “From a market behaviour perspective, Wednesday’s decline appears largely driven by systematic profit-booking after short-covering rallies, rather than fresh long-term selling. However, the magnitude of the fall indicates that traders remain reluctant to carry aggressive bullish positions in the current uncertain macro environment,” Hariprasad K, Research Analyst and Founder, Livelong Wealth, said.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,672.64 crore on Tuesday, according to exchange data. Domestic Institutional Investors (DIIs), however, bought stocks worth Rs 6,333.26 crore. Looking ahead, markets are likely to remain cautious as investors await US and domestic inflation data and clearer macro signals before taking fresh directional bets, Vinod Nair, Head of Research, Geojit Investments Limited, said. In the previous session, the Sensex jumped 639.82 points or 0.82 per cent to settle at 78,205.98. The Nifty climbed 233.55 points or 0.97 per cent to end at 24,261.60.