New Delhi: The ongoing conflict between Iran and Israel has sparked major panic on Dalal Street, leading to a sharp decline in the stock market as the Sensex plummeted by 1,250 points during early trading on Thursday, though it later showed a slight recovery, down 958.55 points at 11:02 am, settling at 83,307.74.
Similarly, the Nifty50 index fell by 297.50 points, trading at 25,499.40, with all major market indices reflecting the negative impact of the geopolitical tensions.
The heightened tensions arise from Iran’s recent missile strikes on Tel Aviv, raising fears of a prolonged conflict that could disrupt oil supplies from the Middle East.
Experts caution that if Israel targets Iranian oil facilities, crude oil prices could soar, posing significant risks to oil-importing nations like India.
Currently, crude prices have already surged, with Brent crude surpassing $75 per barrel and West Texas Intermediate reaching $72 per barrel, both up by 5% in recent days. This increase threatens to escalate inflation and worsen India’s fiscal deficit, given the country’s heavy reliance on oil imports.
Compounding these concerns are new regulations from the Securities and Exchange Board of India (Sebi) regarding the futures and options (F&O) market. These tightened rules, which include limits on weekly contract expiries and increased contract sizes, have left many retail investors apprehensive, further contributing to the market decline.
Moreover, foreign investors have been withdrawing substantial funds from Indian stocks, with ₹5,579 crore pulled out on Tuesday alone. This trend is attributed to the more attractive investment opportunities presented by the Chinese markets, which have rallied following recent government stimulus measures.
The SSE Composite Index rose by 8% on Tuesday, gaining over 15% in just one week. Given the current volatility in the market, experts recommend that investors consider reallocating portions of their portfolios into safer sectors, such as pharmaceuticals and fast-moving consumer goods (FMCG), to mitigate risk.
