Indian equity benchmarks continued their downward spiral for the fourth straight session on Wednesday, as escalating tensions in the Middle East weighed heavily on investor sentiment. The BSE Sensex plunged over 400 points, while the NSE Nifty50 slipped below the 18,000 mark, reflecting broad-based selling pressure across sectors.
Market Performance
The 30-share BSE Sensex tanked 412.16 points or 0.67% to close at 60,864.33, while the broader NSE Nifty50 declined 118.65 points or 0.66% to settle at 17,994.80. During the session, the indices touched intraday lows of 60,785.03 and 17,967.15, respectively.
Key Drags
Major losers on the Sensex included Mahindra & Mahindra, Tata Motors, IndusInd Bank, HDFC Bank, and ITC. Banking stocks were the worst hit, with the Nifty Bank index falling 0.8%. IT stocks also witnessed heavy selling, with the Nifty IT index dropping 1.2%.
Among individual stocks, Reliance Industries ended flat after a volatile session, while HDFC Bank shed 1.5%. On the other hand, defensive stocks like Nestle India and Hindustan Unilever managed to close in the green, providing some support to the market.
Geopolitical Factors
The fresh round of selling was triggered by reports of increased hostilities in the Middle East, particularly involving Iran and Israel. The geopolitical uncertainty has led to a spike in crude oil prices, which surged over 2% during the day, raising concerns about inflation and its impact on the global economy.
Analysts noted that the ongoing conflict could disrupt supply chains and push up energy costs, potentially leading to higher interest rates worldwide. This has prompted foreign institutional investors to pull out funds from emerging markets like India.
Broader Market Sentiment
The broader market also mirrored the weakness, with the BSE Midcap index falling 0.5% and the BSE Smallcap index declining 0.3%. However, some positive cues from the domestic front, such as robust GST collections and strong corporate earnings, limited the downside.
Vinod Nair, Head of Research at Geojit Financial Services, said, "The market is cautious due to the Middle East crisis, but the underlying fundamentals remain strong. We expect volatility to continue in the near term until there is clarity on the geopolitical situation."
Outlook
Market participants are now closely watching the upcoming US Federal Reserve meeting and the progress of the monsoon season in India for further direction. The Fed's stance on interest rates will be crucial for global liquidity flows, while a good monsoon could boost rural demand and support economic growth.
Technically, the Nifty has formed a bearish candle on the daily chart, indicating further weakness. The immediate support for the index is seen at 17,800, while resistance is at 18,200. Investors are advised to adopt a cautious approach and focus on quality stocks with strong fundamentals.
