Sensex, Nifty Plunge as West Asia Tensions and Crude Prices Soar
The Indian stock market, including the Sensex and Nifty, saw declines in early trade due to renewed geopolitical tensions in West Asia and a subsequent rise in crude oil prices. This triggered a broader risk-off sentiment globally.
Brent crude, the global oil benchmark, surged over 2 per cent to $90.19 per barrel, reflecting concerns over global energy supplies. Weak global market sentiments, influenced by potential US Fed rate hikes and higher bond yields, also contributed to the negative investor sentiment.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,039.80 crore on Friday, indicating a cautious approach by international investors. Major laggards among Sensex firms included Infosys, Tata Steel, and Bajaj Finance, while HDFC Bank and Kotak Mahindra Bank saw gains.
V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that the market has taken a potential rate hike in the FOMC meeting scheduled for September 15-16 as an indication of a rise in bond yields, which is negative for equity markets. He also pointed out that the renewed escalation of tensions between the US and Iran pushed Brent crude above $90.