Live Events
1) Iran-US-Israel war escalates
2) Oil prices above $110
3) Rupee at fresh lifetime low
4) Persistent FII selling
5) US bond yield rises
6) Global markets plunge
7) Industrial diesel price hiked
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Indian stock markets tumbled on Monday, with the Sensex plunging over 1,837 points and the Nifty closing near the crucial 22,500 level, as escalating tensions between Iran and the US, a weakening rupee, and other factors weighed on investor sentiment.Sensex tumbled 1,837 points at 72,696, while the Nifty 50 slipped 602 points to 22,513. The sharp selloff wiped off more than Rs 14 lakh crore from the total market capitalisation of all BSE-listed companies, bringing it down to Rs 414.77 lakh crore.Titan and Trent shares were the top losers on Sensex as the two Tata Group-stocks declined around 6% each. UltraTech Cement, Bharat Electronics (BEL), IndiGo and Tata Steel shares followed, declining nearly 5% each. HCL Tech meanwhile bucked the trend, rising around 2% to lead losses.On NSE, all sectoral indices closed in the red. Nifty Consumer Durables, Nifty Metall and Nifty Realty indices were the top sectoral losers, falling around 5% on Monday. Nearly 3,008 stocks declined on the stock exchange, while 332 advanced and 80 remained unchanged.Incidentally, today’s market crash comes on the sixth anniversary of the infamous March 23, 2020, crash, which saw the Nifty 50 plunge 13% in a single day. Stock markets had plunged on that day as the Indian government imposed a nationwide lockdown in order to curb the spread of COVID-19 virus.Here are the key factors pushing markets down today:The ongoing war between Iran and the US-Israel sharply escalated during the weekend. While the countries continued to exchange missiles, threats from their top leaders raised worries over the conflict worsening further in the oil-rich Middle East. US President Donald Trump said that he has set a Monday deadline for Iran, warning that the US can strike Iran's power plants unless Tehran fully reopens the Strait of Hormuz within 48 hours. In response, Iran warned it would target energy and water infrastructure across the Gulf if the US follows through on its threat.The war has now entered its fourth week, despite brief expectations of some diplomatic resolution which, however, remained unfulfilled.Oil prices continued to remain elevated as the war between Iran and the US-Israel saw fresh escalations over the weekend. Brent crude rose to $113 per barrel on Monday. The prices have seen a significant surge since the onset of the conflict in the oil-rich Middle East, which saw the effective closure of the Strait of Hormuz. More than 20% of the world’s oil supply passes through the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.After briefly letting ships pass through the critical waterway, Iran has now threatened to close the Strait of Hormuz "indefinitely" if the United States threatens to bomb Iranian energy facilities. This retriggered the rally in oil prices.Indian rupee extended its sharp decline against the US dollar, declining to a fresh record low on Monday amid rising oil prices, persistent FII selling and other factors. The Indian currency breached the 94 mark against the US dollar today, breaking its previous all-time low of 93.7350 which it had hit on Friday.Rupee, which is one of the most exposed currencies to oil price increases, has weakened nearly 3% since the war in the Middle East began. “Sustained strength in crude is expected to significantly widen India’s import bill, putting continued pressure on the domestic currency. The macro environment remains unfavourable for the rupee, with higher energy costs and persistent dollar demand weighing on sentiment. Unless crude prices ease meaningfully, the rupee is likely to stay under pressure,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities. The analyst expects Rupee to trade in a weaker range of 93.00–94.25 against the US dollar in the near term.Foreign investors have been strongly selling Indian equities since the beginning of the war in the oil-rich Middle East amid a global risk-off sentiment in markets. FIIs extended their selling streak for the 16th consecutive session on Friday, net selling Indian shares worth Rs 5,518 crore, according to data on NSE.While this does not reflect today’s activity, sustained outflows in recent sessions have weighed on investor sentiment.The 10-year US Treasury yield climbed more than 10 basis points to cross 4.4% on Friday, the highest level in around one year. The two-year US treasury yield, which is highly sensitive to expectations around rate cuts by the Federal Reserve, meanwhile rose to 3.93%. Rising bond yields tend to make government securities more attractive relative to equities, potentially putting pressure on stock markets.Globally, stock markets plunged with India’s Dalal Street being no exception. Asian markets sharply sank on Monday, with South Korea’s Kospi tumbling 7%. Japan’s Nikkei tumbled nearly 4% and Hong Kong’s Hang Seng fell 3.6%.Wall Street had closed in the deep red on Friday, with the tech-heavy Nasdaq tumbling more than 2%. S&P 500 fell more than 1.5%. European markets also tumbled today, with Germany’s DAX, France’s CAC and UK’s FTSE declining nearly 2% each.State-run oil marketing companies (OMC) on Friday announced that industrial diesel prices will be hiked by 25%, or around Rs 22 per litre, to partly offset the surging crude rates. This rise in industrial diesel prices will likely bear an impact on several companies, while retail diesel rates remain the same.According to Nomura, Indian Railways, state transport undertakings, mining firms, infrastructure and construction companies, manufacturing units, captive power plants and telecom towers are the key users of the industrial diesel. “According to our estimates, and discussion with company managements, industrial diesel accounts for ~13% of total diesel sold in the country,” it said.Domestic markets witnessed a sharp decline, mirroring weakness across Asian markets amid escalating tensions in the Middle East and concerns over potential disruptions to global energy supplies, Vinod Nair, Head of Research at Geojit Investments explained. “Investor sentiment turned cautious following Trump’s 48-hour ultimatum to Iran on the Strait of Hormuz,” he added.“Rising global bond yields signalled heightened inflation and fiscal concerns, while the rupee falling to a record low further pressured markets and triggered FII outflows. Broad-based selling was observed across sectors, with metals, realty, and consumer durables leading the losses, and mid- and small-cap stocks underperforming. “In the near term, markets are likely to remain risk-averse until there is greater clarity on de-escalation, though the correction is offering selective long-term opportunities for investors,” the analyst said.Rupak De, Senior Technical Analyst at LKP Securities, had seen Nifty 50 finding support at the 22,950-23,000 range, below which bearishness may re-emerge. Notably, the index has now comfortably fallen below both the support levels.“Nifty on the weekly chart formed a Doji candle with long upper shadows highlighting intraweek volatility. Long upper shadow signals strong selling pressure at higher levels. Technically, the index continues to show a bearish bias in both the short and medium term, as it is forming a pattern of lower highs and lower lows,” said Bajaj Broking.A move below last week's low could lead to further downside, with the index potentially declining toward the major support area of 22,700–22,400, the domestic brokerage said. "On the higher side, the last week’s high of 23,862 is expected to act as immediate resistance, sustaining below the same will keep the immediate bias down,” it added.