Sensex falls over 400 points to open at 65,588, Nifty in the red at 19,511 | spcilvly

Benchmark stock indices fell in early trading on Monday as rising tensions in the Middle East sparked risk aversion in the market.

Representational Image
Representational Image

Market analysts said investors preferred to stay on the sidelines and refrained from taking big risks as the conflict between Israel and Hamas has introduced enormous uncertainty into the markets.

The 30-share BSE Sensex plunged 407.19 points or 0.62 per cent to 65,588.44 points in early trade. The Nifty fell 142.70 points or 0.72 per cent to 19,510.80 points.

State Bank of India, Tata Steel, Titan, IndusInd Bank and Asian Paints were among the top laggards.

On the other hand, IT majors HCL Technologies, Tech Mahindra, TCS, Wipro and Infosys, Hindustan Unilever and Sun Pharma defied the overall market trend and traded in positive territory.

The BSE benchmark index had risen 364.06 points or 0.55 per cent to settle at 65,995.63 points on Friday. The Nifty had advanced 107.75 points or 0.55 per cent to end at 19,653.50.

“The conflict between Israel and Hamas has introduced enormous uncertainty in the markets. No one knows how this war will evolve,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

He said that although it is unlikely to cause a major disruption in oil supplies at present, the situation will change if Iran, a major supporter of Hamas, is drawn into the war.

“That can disrupt oil supply and cause a rise in crude oil, which can trigger risk aversion in the market. This is a time to be cautious,” he added.

Traders are also expected to remain cautious before macroeconomic data is announced later this week.

Industrial and manufacturing production data for August is scheduled to be announced on October 12. Simultaneously, the inflation rate for September will be announced, followed by wholesale price index (WPI) data on October 13.

On Friday, the Reserve Bank of India was expected to leave its key interest rate unchanged and signal that it would keep liquidity tight by using bond sales to push prices closer to the target.

The RBI’s six-member monetary policy committee maintained the benchmark repurchase (repo) rate at 6.50 per cent in a unanimous decision for the fourth consecutive meeting. He also maintained a “retreat from adaptation” stance.

Asian markets are trading lower on Monday as Chinese and Hong Kong stocks fall.

European markets finished broadly higher on Friday, with Germany’s DAX gaining 1.06 percent. France’s CAC 40 rose 0.88 percent and London’s FTSE 100 closed 0.58 percent higher.

US markets finished higher on Friday, with the S&P 500 closing with a gain of 1.18 percent and the Dow Jones Industrial Average rising 0.87 percent.

Meanwhile, global benchmark Brent crude oil saw a sharp rise of 3.68 percent to $87.69 a barrel on Monday.

Foreign Institutional Investors (IFIs) dumped stock value $90.29 crore on Friday, according to exchange data.

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