Summary of this article
Nifty and Sensex were both down nearly 2 per cent each
Fears of disruption in crude oil supply and escalating tensions extend losses in stocks
Indian stock markets extended losses with the benchmark Nifty and Sensex both down around 2 per cent from the previous close. With no signs of de-escalation in the US-Iran war, markets remain under pressure, tracking losses in Asian markets.
The Sensex was down over 1,400 points from market close on March 2, and was trading at 78,761.33 at the time of writing. Meanwhile, the Nifty was trading at 24,370.20, nearly 500 points down from the previous close. Stock markets were closed on March 3 on the occasion of Holi.
The losses were seen across markets, with the Brent crude oil rising back above $80 per barrel, and investors running towards safe-haven assets such as gold and silver.
Crude oil prices rose after the US announced operation ‘Epic Fury’ against Iran, with US officials saying that it was a combat operation with the aim of demilitarising Iran and eliminating terrorist forces in the country.
Tata Steel, Larsen & Toubro, and Shriram Finance were among the top losers in Nifty while Coal India, Infosys, and Bharti Airtel were among the top gainers on March 4.
Broader market indices extended the decline, with both the Nifty MidCap and the SmallCap indices falling nearly 3 per cent, each.
Nifty Metal was down the most among sectors, weighed down by shares of Steel, JSW Steel, and Vedanta. This was followed by the Nifty PSU Bank and the Nifty Realty indices, which were the second and third-worst-performing sectors. However, while the Nifty IT index erased gains, the pressure was limited, and the index was the best-performing sector, falling the least on March 4.
With the escalation in conflict in West Asia and the possibility of a disruption in the Red Sea and the Persian Gulf, JM Financial flagged risks, saying that the tensions could impact Indian port logistics. The company said that LNG shipments may bear the brunt of the disruptions, while crude oil imports are seen to realign if refiners opt for alternative suppliers in the wake of the conflict. The brokerage said that the realignment in supply sources could impact cargo volumes in Indian ports in March.
The rupee was also under pressure, rising to 92.26 against the US dollar. Experts said that rising oil prices and tensions in West Asia could further quicken the fall in the rupee and could push it to a low of 93 against the dollar.
