Markets: Mideast war, crude@USD119/barrel, FPI withdrawals bleed Sensex, Nifty by over 3%
Virendra Pandit
New Delhi: With Iran targeting gas fields in West Asia, crude oil prices shooting up to USD 116 per barrel, and foreign investors fleeing, India’s benchmark indices Sensex and Nifty50 bled heavily over 3 percent on Thursday, competing with levels during the COVID-19-triggered lockdowns in 2020.
On the first day of the Hindu New Year (Vikram Samvat 2083), Sensex plunged 2,496.89 points (minus 3.26 percent) to settle at 74,207.24, while Nifty tanked 775.65 points (minus 3.26 percent) to close at 23,002.15.
Heavy selling was seen across counters. All sectoral indices closed lower. Broader market indices bled. Nifty Midcap 100 closed lower by 3.19 percent, and SmallCap 100 closed down 2.94 percent.
All stocks on the Sensex ended in red. Power Grid, Reliance Industries, NTPC were among the top laggards.
The immediate trigger for this bloodbath was Iran’s missile strike on Qatar’s Ras Laffan Industrial City, which caused what officials described as “extensive damage,” while Saudi Arabia intercepted four ballistic missiles targeting Riyadh.
Foreign selling in Indian equities surged in the first half of March, led by financials, marking the heaviest fortnightly selling in 17 months and dragging the Nifty50 to its worst fortnight since the COVID-19-led rout in March 2020.
The sharp withdrawals came despite early signs of an earnings recovery in the December quarter as the U.S.-Israeli war on Iran sent crude prices surging, pushed the rupee to a record low and revived concerns over energy supply, inflation and India’s growth outlook.
Sustained selling dragged the Nifty50 down 8.1 percent for the first half of this month, with financials and banks plunging 9.8 percent and 11.2 percent, respectively.
Both Sensex and the Nifty50 have dropped about 10 percent each so far this year, and confirmed a technical correction last week. Selling spanned 17 of the 24 sub-sectors classified by NSDL, with capital goods one of the few bright spots.
Market observers said the intense pullback in financials had made valuations more appealing for domestic investors.
The Nifty50 and the Sensex tanked as energy prices soared after escalating conflict involving the US, Iran, and Israel caused further damage to oil infrastructure, according to media reports.
The Nifty India Volatility Index surged 22.86 percent to 23.20 during the session, indicating uncertainty will likely remain high in the near-term. The index settled 21.79 percent higher at 22.80.
Broader markets fell in line with the benchmark indices. The Nifty MidCap and the Nifty SmallCap indices ended 3.19 percent and 2.94 percent down, respectively.
Sector-wise, the Nifty Auto was the worst hit among peers. The Nifty Financial Services and the Nifty IT also underperformed.
During the market hours, Brent crude surged 11 percent to USD 119.5 per barrel after reports said that Saudi Arabia stopped loading oil at the port of Yanbu after key refiners suffered damage. Samref’s refineries were hit with drones, and several Aramco’s refineries were caught fire due to strikes in the US-Iran conflict.
Another key factor for the Thursday bloodbath was foreign selling in Indian equities. It surged in the first half of March, led by financials, marking the heaviest fortnightly selling in 17 months and dragging the Nifty50 to its worst fortnight since the COVID-19-led rout in March 2020.
Foreign portfolio investors offloaded stocks worth Rs. 52,704 crore, data from the National Securities Depository showed on Thursday, with financials – the most foreign-owned major Indian sector – accounting for 60 percent of the total outflows, the media reported.
The sharp withdrawals came despite early signs of an earnings recovery in the December quarter as the U.S.-Israeli war on Iran sent crude prices surging, pushed the rupee to a record low and rekindled concerns over energy supply, inflation and India’s growth outlook.
Sustained selling dragged the Nifty50 down 8.1 percent for the first half of this month, with financials and banks plunging 9.8 percent and 11.2 percent, respectively.
The Nifty50 and Sensex have dropped about 10 percent each so far this year, and confirmed a technical correction last week.
Selling spanned 17 of the 24 sub-sectors classified by NSDL, with capital goods one of the few bright spots.
Experts said the intense pullback in financials had made valuations more appealing for domestic investors.
