West Asia flare-up roils equity, rupee; Sensex, Nifty slip over 1% | Stock Market Today- QHN

The Indian equity benchmarks declined on Monday as Iran’s missile and drone strike on Israel prompted investors to flee risky assets. The losses, however, were contained as investors shrugged off concerns of a wider war amid diplomatic efforts to contain the crisis.

The rupee, too, depreciated to a fresh closing low of 83.45 per dollar on Monday but it performed better than most Asian currencies. Gold continued to witness a safe-haven rush but pressure eased. 

Though India’s 10-year government bond yield remained largely flat, the 10-year US Treasury yield rose as much as 11 basis points to 4.63 per cent, the highest level since mid-November.

After declining more than 1 per cent for a second day, the Sensex ended the session at 73,400, dropping 845 points or 1.14 per cent — its sharpest decline since March 27. The Nifty 50 ended at 22,273, a drop of 247 points or 1.1 per cent.

Over the weekend, Iran launched an unprecedented attack on Israel in response to the country’s involvement in a strike at the Iranian consulate in Damascus. However, most of the missiles were intercepted by the Israeli military.

The markets in the West gained amid hopes that the flare-up between Iran and Israel would now calm down. The S&P 500 was in the green in early trade on Monday.

Under pressure: Asian currencies vs $ 

Brent crude, too, eased below $90 a barrel amid signs of both sides avoiding further escalation of tensions. 

Gold swung between gains and losses in the international market but traded below the $2,400 per ounce mark. At Zaveri Baazar in Mumbai, standard gold traded slightly lower at Rs 72,521 per 10 grams on Monday versus Rs 72,881 on Friday.

Many remain hopeful that further flare-up is unlikely after the Iranian mission to the United Nations said the issue can be considered concluded. Moreover, the US and other nations have also asked Israel to maintain restraint.

 “Geopolitical tensions and inflationary headwinds in the Western world have led to pressure on equity markets worldwide. While India is relatively better placed, higher crude oil prices are a significant dampener. However, according to the news flow at this juncture, the chances of escalation in geopolitical tensions are not very high. Thus, market corrections may not be very significant. Investors should use the corrections based on global market conditions to invest and add to positions in quality stocks,” said Naveen Kulkarni, chief investment officer of Axis Securities PMS.

Analysts said the equity markets could remain skittish if heightened geopolitical tensions lead to higher energy prices at a time when central banks across the globe are struggling to bring inflation to the accepted levels.

A research note by Bank of America (BofA) said that rate cuts could now start only in December instead of June. “We now expect the Fed to start cutting rates in December. We no longer think policymakers will gain the confidence they need to start cutting in June — 2024 is starting to look like 2015, but in reverse,” it said.

Going forward, the ongoing earning season and macro data from China and the Eurozone will determine the market trajectory. Investors will also be tracking India’s general elections, which begin on Friday.

“With the start of results season and amid poll promises by several political parties, we may continue to see sector and stock-specific action,” said Siddhartha Khemka, head of retail research of Motilal Oswal Financial Services.

 The market breadth was weak, with 3,043 stocks declining and only 877 advancing. Barring three, all Sensex stocks declined. HDFC Bank fell by 1.6 per cent and contributed the most to the Sensex loss.

 Of the 13 sectoral indices of the BSE, only BSE Oil & Gas and BSE Energy ended with gains.

First Published: Apr 15 2024 | 9:34 PM IST