Investors stayed on the sidelines and refrained from taking risks amid uncertainty due to the Israel-Hamas conflict, analysts said.
Published Date – 05:11 PM, Mon – 9 October 23
Mumbai: Equity benchmark index Sensex tumbled nearly 500 points on Monday as investors offloaded finance, banking and energy stocks amid escalating tensions in the Middle East and surging crude oil prices overseas.
Investors stayed on the sidelines and refrained from taking risks amid uncertainty due to the Israel-Hamas conflict, analysts said. The 30-share BSE Sensex fell 483.24 points or 0.73 per cent to settle at 65,512.39. The Nifty declined 141.15 points or 0.72 per cent to end at 19,512.35.
Only three Sensex stocks settled in the green, while the Nifty-50 saw its 43 scrips closing in the red. “Investors dumped equity assets as they turned risk off on concerns that a faceoff between Israel and Hamas could further deteriorate the global economy already reeling under higher interest rates and stubbornly high inflation.
“There are concerns that since most of the oil-producing nations are close to the conflict zone, a prolonged war could trigger an upsurge in international crude oil prices. With a fresh surge in crude oil prices, higher oil import bills going ahead would stoke domestic inflation and prompt the central bank to take a hawkish stance,” Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd, said.
Mahindra & Mahindra was the top laggard in the Sensex pack, sliding 2.05 per cent, followed by Bajaj Finance, Tata Steel, SBI, Asian Paints, Kotak Mahindra Bank and Titan.
However, IT majors HCL Technologies and TCS defied the trend and gained 1.02 per cent and 0.47 per cent, respectively. FMCG firm Hindustan Unilever rose 0.32 per cent.
In the broader market, BSE SmallCap fell the maximum by 1.72 per cent, while MidCap skidded 1.22 per cent and LargeCap lost 0.84 per cent.
Among sectoral indices, capital goods dropped 1.34 per cent, commodities declined 1.30 per cent, bankex fell 1.04 per cent, and auto slipped 0.95 per cent.
Besides, realty skidded 0.92 per cent, healthcare declined by 0.31 per cent, teck dipped by 0.19 per cent, and IT fell by 0.18 per cent. “Financials and consumer discretionary sectors underperformed due to concerns regarding earnings vulnerability if inflation continues to rise.
“Conversely, the IT sector is displaying signs of returning to normalcy. While consensus estimates for Q2FY24 remain positive, it is important to note that geopolitical tensions could potentially disrupt this optimistic outlook,” Vinod Nair, Head of Research at Geojit Financial Services, said.
Investors were also trading cautiously ahead of macroeconomic data to be announced later this week.
The industrial production and manufacturing data for August are scheduled to be announced on October 12. Inflation rate for September and Wholesale Price Index (WPI) data will be announced on October 13.
On Friday, the Reserve Bank of India expectedly left its key interest rate unchanged and signalled that it would keep liquidity tight using bond sales to bring prices closer to the target.
“European and Asian stocks came under pressure on Monday in a global risk-off move following the eruption of a growing conflict between Israel and the Palestinian Islamist group Hamas. This pushed investors toward safe-haven assets as this negative trigger is the latest in the list, including the macro-economic uncertainties in Europe and China, hawkish central banks and already rising oil prices,” Deepak Jasani, Head of Retail Research, HDFC Securities, said.
Elsewhere in Asian markets, Hang Seng was trading 0.19 per cent higher. Shanghai Composite Index was down 0.41 per cent, while Taiwan T SEC 50 Index was up 0.28 per cent. The Japanese stock markets were closed on Monday.
European markets were trading on a mixed note. Germany’s DAX declined 0.50 per cent, and France’s CAC 40 was down 0.27 per cent. London’s FTSE 100 was trading 0.26 per cent higher.
The US markets ended higher on Friday, with the S&P 500 closing with a gain of 1.18 per cent and the Dow Jones Industrial Average Index up 0.87 per cent.
Meanwhile, global oil benchmark Brent crude rose sharply by 3.32 per cent to USD 87.39 a barrel on Monday.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 90.29 crore on Friday, according to exchange data.
The BSE benchmark had climbed 364.06 points or 0.55 per cent to settle at 65,995.63 points on Friday. The Nifty had advanced 107.75 points or 0.55 per cent to end at 19,653.50.
“The market may continue to exhibit a ‘sell on the rise’ sentiment until Nifty surpasses the 19,700 level,” Rupak De, Senior Technical analyst at LKP Securities, said.
