Sensex plunges nearly 800 points as West Asia conflict drives oil prices higher

Indian equity benchmarks fell sharply in early trade on Wednesday as escalating conflict in West Asia pushed crude oil prices higher and a sell-off in global markets dampened investor sentiment.

The 30-share BSE Sensex tumbled 788.52 points to 76,155.76, while the NSE Nifty declined 269 points to 23,786.80.

InterGlobe Aviation, Eternal, Mahindra & Mahindra, UltraTech Cement, Bajaj Finserv and Bajaj Finance were among the biggest laggards in the Sensex pack. Adani Ports and Sun Pharma were the only gainers.

Oil prices remained a major concern for domestic equities, with Brent crude rising 0.76 per cent to $95.37 a barrel. Analysts warned that the intensifying US-Iran conflict could disrupt energy supplies and keep Indian markets under pressure.

Ponmudi R, chief executive officer of online trading and wealth-tech firm Enrich Money, said soaring crude prices and rising global bond yields were weighing on sentiment amid the worsening conflict.

While India’s resilient domestic growth offered some support, external economic and geopolitical risks were likely to determine the market’s direction in the near term, keeping the outlook cautious, he said.

Ponmudi identified crude oil as the principal short-term threat to Indian equities, noting that West Texas Intermediate prices had risen by more than 8 per cent over the previous two sessions following renewed military tensions between the US and Iran.

V K Vijayakumar, chief investment strategist at Geojit Investments Limited, said the escalation and the overnight surge in Brent crude to around $96 were negative for market sentiment.

The weakness extended across Asian markets. South Korea’s Kospi fell more than 3 per cent, while Japan’s Nikkei 225 declined nearly 3 per cent. China’s Shanghai Composite and Hong Kong’s Hang Seng also traded lower.

US stocks closed in the red on Tuesday. The S&P 500 lost 0.7 per cent, the Dow Jones Industrial Average fell 0.8 per cent and the Nasdaq declined 1 per cent as higher energy prices and bond yields fuelled concerns over tighter monetary conditions.

The yield on the benchmark US 10-year Treasury note climbed to around 4.79 per cent, approaching a 20-month high.

Hariselvan Radhakrishnan, founder and chief executive officer of research analyst firm HST Wealth, said Asian markets had followed Wall Street lower as investors assessed the effect of rising energy costs and the wider global bond sell-off.

Foreign institutional investors, however, purchased Indian equities worth Rs 1,143.38 crore on Tuesday, according to exchange data.

In the previous session, the Sensex ended almost unchanged, slipping 12.99 points, or 0.02 per cent, to 76,944.28. The Nifty declined 24.60 points, or 0.10 per cent, to close at 24,055.80 on the weekly expiry day.

With PTI inputs