Amidst a turbulent day of trading, the Indian stock market sharply declined, influenced by the escalating tensions between Iran and Israel. The Sensex dropped by 591.21 points, starting at 71,898.32, while the Nifty fell by 183.55 points, opening trading at 21,812.30.
With market sentiment bleak, only six Nifty companies made gains, while a significant 44 experienced declines. Noteworthy advancers among the Nifty firms were ONGC, Apollo Hospital, Cipla, ITC, and Dr. Reddy, whereas BPCL, HDFC Life, Bajaj Auto, Infosys, and Coal India were notable losers.
Amid apprehensions of heightened tensions between Israel and Iran, oil prices surged by nearly 4 percent. Varun Aggarwal, the founder and managing director of Profit Idea, noted that the Nifty 50 index encountered significant volatility, ultimately closing the day down by 152 points below the 22,000 threshold. Despite lingering below the crucial 21-EMA moving average, the hourly chart revealed a bullish harami pattern, suggesting a possible bullish turnaround in the short run. Furthermore, the hourly chart displayed a bullish divergence.
Against a backdrop of subdued global signals, the domestic equity market commenced Friday’s session with a lower opening. Asian markets trended downwards, mirroring mixed performance in the US stock market, influenced by hawkish remarks from US Federal Reserve officials and robust economic indicators indicating a hesitance towards near-term interest rate cuts.
Aggarwal remarked, “Market anticipation of a rate cut in June has dwindled to 15.2 percent, with July at 41.5 percent, down from 48.4 percent a week earlier. Reports of explosions in Iran, Syria, and Iraq heightened risk sentiment, prompting a decline in oil prices and a retreat to the dollar.”
US equity futures declined, accompanied by a roughly 2 percent drop in Japanese stocks. Safe-haven assets saw a surge in demand, resulting in a decrease in Treasury yields and an uptick in the index of dollar strength.
Economic indicators revealed subdued US jobless claims and a Philadelphia Fed factory index surpassing expectations. Nonetheless, concerns about inflation resurfaced, tempering prospects for rate cuts in 2024.
Amid escalating geopolitical tensions, emerging market currencies saw a decline, while gold prices surged. S&P Global Ratings downgraded Israel’s sovereign rating for the first time ever, citing increased regional geopolitical risks.
As the standoff between Israel and Iran intensifies, investors are on edge, anticipating potential market volatility in the near future.