Indian stock markets experienced a decline, with the Sensex and Nifty closing lower, as renewed tensions in West Asia pushed crude oil prices higher, sparking concerns over inflation and potential interest rate hikes.
Photograph: Hemanshi Kamani/Reuters
Key Points
- Indian stock markets, including the BSE Sensex and NSE Nifty, closed lower due to selling pressure in IT and FMCG sectors.
- Renewed tensions in West Asia, specifically between the US and Iran, caused Brent crude oil prices to jump over 3.6 per cent to $91.30 per barrel.
- Rising crude oil prices and global bond yields have heightened concerns about energy-led inflation and a potential higher interest rate environment.
- Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,039.80 crore on Friday, contributing to the negative market sentiment.
- Global market trends were mixed, with some Asian markets higher and others, along with European and US markets, trading lower.
Stock markets closed lower on Monday due to selling in IT and FMCG shares as renewed tensions in West Asia triggered a rally in crude oil prices.
The 30-share BSE Sensex declined 307.24 points, or 0.40 per cent, to settle at 76,957.27 with 20 of its constituents ending lower and 10 with gains.
During the day, it tanked 513.19 points, or 0.66 per cent, to 76,751.32.
The 50-share NSE Nifty dropped 95.25 points, or 0.39 per cent, to end at 24,080.40.
Impact of Global Tensions and Fund Outflows
Weak trends in global markets and foreign fund outflows dented investor sentiment, analysts said.
Among the 30 Sensex firms, Adani Ports, ITC, Bharti Airtel, HDFC Bank, Infosys and Kotak Mahindra Bank were the major laggards.
Sun Pharma, ICICI Bank, Axis Bank and State Bank of India were among the gainers.
Brent crude, the global oil benchmark, jumped 3.63 per cent to $91.30 per barrel.
Analyst Insights on Market Volatility
“Escalating tensions between the US and Iran have kept investors on edge, as fading prospects of a diplomatic breakthrough pushed crude oil prices and global bond yields higher. Rising crude oil prices and bond yields have renewed concerns over energy-led inflation and a higher interest rate environment, which could weigh on the earnings cycle,” Vinod Nair, Head of Research, Geojit Investments Limited, said.
Meanwhile, the Fed chair’s recent comments after the Jackson Hole address have increased expectations of a potential September rate hike, keeping global yields elevated and contributing to near-term volatility in emerging markets, he added.
International Market Performance
In Asian markets, South Korea’s Kospi and Shanghai’s SSE Composite ended higher, while Japan’s Nikkei 225 index and Hong Kong’s Hang Seng index settled lower.
Markets in Europe were trading mostly lower. US markets ended in negative territory on Friday.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,039.80 crore on Friday, according to exchange data.
