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Markets Extend Losses
Indian stock markets continued their slide on Thursday afternoon. The benchmark Sensex fell by nearly 600 points, while the Nifty slipped below the 24,200 level. The broad market downturn was driven by a combination of weak global sentiment, a sharp rise in crude oil prices, ongoing foreign investor selling, and pressure in the banking and IT sectors.
Around 12:47 pm, the BSE Sensex was down 585.76 points, or 0.75%, trading at 77,258.76. The NSE Nifty50 had fallen 166.35 points, or 0.68%, to 24,160.30, signaling widespread investor caution.
Geopolitical Tensions Boost Oil Prices
Rising geopolitical tensions between the US and Iran have significantly impacted global markets, pushing crude oil prices higher. Brent crude reportedly surpassed $100 per barrel amid growing concerns over the Strait of Hormuz and instability in the wider Middle East. This surge in oil prices is particularly challenging for oil-importing nations like India, potentially increasing inflation and squeezing corporate profit margins.
Foreign Investor Selling and Earnings Concerns
Banking and IT stocks, usually strong market performers, were notable drags on the index. Persistent selling by foreign portfolio investors (FPIs) added to the negative sentiment. Investors are also adopting cautious stances ahead of key fourth-quarter earnings reports. State Bank of India (SBI) is scheduled to release its results later today. Analysts expect subdued profit growth for SBI, citing potential treasury losses despite steady loan expansion.
Recent quarterly earnings have also fallen short of expectations, contributing to market volatility. For example, Indian Bank shares dropped sharply last week after its results, even with reported profit growth, indicating investor worries about valuations and future profit outlooks. Britannia Industries and Larsen & Toubro also experienced pressure, attributed to weak international sales and concerns over slower growth due to geopolitical risks, respectively.
Expert View: Volatility Linked to News
Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, believes markets will likely remain highly sensitive to news in the short term. He pointed out that while reports of de-escalation talks between the US and Iran offer some hope, a prolonged conflict could significantly drive up crude oil prices. This would likely slow global growth and increase inflation, posing considerable risks to equity markets globally.
Vijayakumar added that times of heightened uncertainty can create chances for long-term investors to buy strong companies at better prices. He advises a careful, step-by-step investment approach.