Nervousness gripped the equity markets on April 15 following the geopolitical tensions in West Asia, with the 30-share BSE Sensex and the NSE Nifty registering a fall, however, the benchmark indices have recovered some lost ground.
At 10:45 a.m. the Sensex was down 488.57 points or 0.66% to 73,756.33 and the the Nifty-50 index too recovered to 22,382.55, down 136.85 or 0.61%. Earlier in the day, the Sensex fell by 929.74 points to 73,315.16 and the NSE Nifty declined 216.9 points to 22,302.50.
All the 13 major sectors logged losses. The broader, more domestically-focused small- and mid-caps lost about 3% and 2%, respectively. From the Sensex basket, Tata Motors, State Bank of India, Tata Steel, Power Grid, NTPC, Bajaj Finserv, Bajaj Finance and Asian Paints were the major laggards.
The escalating tensions between Iran and Israel have sent ripples across global markets. Last Friday witnessed a significant decline in both Sensex and Nifty 50, with each index experiencing a slump of around 1%.
The Indian Rupee (INR) has also come under pressure in the interbank forex market. The rupee is trading at 83.43 (spot) as against overnight close of 83.38, depreciating further against the US Dollar.
Dr. V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, “There are many headwinds that will weigh on markets today: the renewed conflict in the Middle East, proposed changes in the India-Mauritius tax treaty and the hotter-than-expected U.S. inflation are negatives. But partly these negatives are in the price since a retaliation from Iran was expected and the higher U.S. inflation was discounted by the market on Friday.”
“Signals from the crude market indicate that the Iran-Israel conflict is unlikely to escalate. President Biden has clearly indicated that he doesn’t support Israeli retaliation. So, the situation may calm down. However, investors have to be guarded since the element of uncertainty is high during a tense situation like this.
IT stocks will be resilient on the back of better-than-expected numbers from TCS and promising outlook for FY 25. Banking stocks will exhibit strength since the results will be good and valuations are fair.”
On Friday, Sensex closed at 74,244.90, down by 793.25 points, while Nifty 50 settled at 22,519.40, down by 234.40 points. This downward trend was attributed to selling across various sectors amidst weak global cues.
Technically, Nifty 50 formed a long negative candle on the daily chart, breaking below the immediate support level of 22,650, signalling a crucial top reversal pattern and suggesting further weakness ahead.
Additionally, on the weekly chart, a small negative candle with an upper shadow hints at a reversal pattern, indicating a bearish outlook.
Varun Aggarwal, founder and managing director, Profit Idea, said, "Despite the short-term negative sentiment, market analysts observe support at 22,500 on a closing basis, which could potentially prevent a significant correction."
However, sustained trading above 22,500 could push the index towards 22,650-22,700 levels, while a drop below 22,500 might initiate a correction of 200-250 points on the downside.
In the global market scenario, Asian markets also declined on Monday, following losses in U.S. equities amid heightened geopolitical tensions in the Middle East.
Crude oil prices remained muted after Iran's drone and missile attacks on Israel, while gold prices rose due to safe-haven demand, reaching $2,359.92 an ounce.
Investors are advised to closely monitor the geopolitical developments and their impact on global markets as trading commences today. The Indian stock market is expected to exhibit volatility in response to unfolding events on the international stage.
(With agency inputs)
