Indian equity markets began the week on a negative note as the geopolitical tensions in West Asia resulted in a broad-based sell-off across the globe. Indian markets were no exception, with the Sensex losing over 1,000 points, and the Nifty50 slipping below the 24,900 mark
The Nifty50 was at 24,862.75 at around 11:04 am, down by 316 points or 1.25%, while the Sensex was at 80,246.75, down by 1,040 points or 1.28%
The markets were down significantly as investors were reacting to the heightened tensions in the Middle East after the military strikes by the US, Israel, and Iran.
Oil price fears weigh on markets
Analysts said the biggest concern for investors is the surge in crude oil prices and the potential disruption of oil supplies in the Gulf region.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said uncertainty surrounding the West Asia conflict will likely keep markets volatile in the near term.
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"The major risk from the market perspective is the energy risk arising from the surge in crude. A sharp spike in crude prices could happen if the Strait of Hormuz is closed and oil transport through the route is obstructed. There is no official confirmation of this yet," he said.
According to Vijayakumar, if Brent crude remains around $76 per barrel, markets may remain weak but are unlikely to witness a deeper crash. He cautioned investors against panic selling during periods of geopolitical stress.
"Experience tells us that panic selling during a crisis is the wrong strategy. Past crises such as the Covid pandemic, the Russia-Ukraine war and the Gaza conflict did not leave a lasting impact on markets months later," he added.
Sectoral impact and global market reaction
Sectors sensitive to crude oil prices were among those expected to face pressure. Companies in aviation, paints, tyres, chemicals and oil marketing may see margin pressure if fuel costs remain elevated.
On the other hand, upstream oil producers such as ONGC and Oil India could benefit from higher crude prices. Defence companies including HAL and BEL may also see positive sentiment amid rising geopolitical risks.
The weakness was not limited to Indian equities. Asian markets declined about 1.1%, while equity index futures in the United States and Europe also moved lower as global investors turned cautious.
Oil markets saw sharp swings. Brent crude briefly surged by as much as 13% before trimming gains, reflecting fears over potential disruption in shipping through the Strait of Hormuz.
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Meanwhile, gold prices climbed nearly 2%, as investors moved toward safe-haven assets amid heightened geopolitical uncertainty.
Foreign investors continue to sell
Foreign portfolio investors (FPIs) remained net sellers in Indian equities. Data showed that FPIs sold shares worth â‚ą7,536 crore on Friday, adding to pressure on domestic markets.
Domestic institutional investors helped cushion the fall by purchasing equities worth â‚ą12,293 crore on a net basis.
Market experts said that while the near-term outlook may remain volatile due to geopolitical developments, periods of correction could present opportunities to accumulate strong companies in sectors such as banking, automobiles, capital goods and defence.
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