"The deep sell-off witnessed in the street was triggered by a perfect storm: escalating geopolitical conflict leading to macroeconomic shocks, along with margin-related technical pressures that forced squaring-off of short-term positions. Crude oil prices are surging back to $100 per barrel, raising concerns over inflation, corporate margins, and INR stability," said Vinod Nair, Head of Research, Geojit Investments Limited.
Top Gainers And Losers
Except for Hindustan Unilever, Bharti Airtel, all other stocks from Sensex basket settled lower with L&T, Tata Steel, SBI, BEL, Maruti Suzuki, Ultratech Cement, Axis Bank, Mahindra And Mahindra, HCL Tech, Eternal, Kotak Bank, Indigo, Adani Ports and HDFC Bank being the top losers.
Among sectoral indices metals and auto stocks were among the worst hit, as supply constraints and higher input costs are expected to hit business and profitability.
"Heightened volatility weakened trader sentiment, discouraging them from carrying positions into the weekend amid persistent geopolitical risks. The lack of buying support from domestic institutional and retail investors, coupled with continued FII outflows, intensified the decline," Nair added.
"Global risk sentiment remained fragile. The ongoing conflict in the Middle East has now entered its second week with no clear signs of de-escalation, as both sides continue to exchange strikes and threats. This prolonged uncertainty has kept risk aversion elevated across global financial markets," said Ponmudi R, CEO of Enrich Money.
Rise In Energy Prices
The sharp rise in crude and other energy prices due to supply chain disruption amid Middle East conflict continue to be the key factors shaping sentiment across equities, bonds, and currency markets.
"Although the International Energy Agency announced the unprecedented release of nearly 400 million barrels from strategic stockpiles, along with an additional 160 million barrels from the U.S. Strategic Petroleum Reserve, these supplies are expected to take weeks or even months to reach global markets," said Ponmudi.
Sharp Decline In Rupee
The Indian currency - the rupee - traded down Rs 0.25 to 92.40 amid concerns that India's fiscal deficit could widen if crude oil prices continue to rise.
Higher oil prices increase the country's import bill and subsidy burden, putting pressure on the current account and government finances.
"With the risk of crude staying high, the outlook for the rupee remains cautious as it could create macroeconomic challenges for the Indian economy. In the near term, the rupee is expected to trade within a range of 91.90–92.80, with crude price movements and dollar index trends remaining key drivers," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.
