MUMBAI: The escalating geopolitical tensions between the US and Iran took a toll on markets around the world, including in India. While global crude prices jumped above the $70-per-barrel level, the sensex closed 788 points or 1.7% lower at 40,677, the rupee weakened below the 72-per dollar mark and gold prices shot up to above Rs 41,000. The day’s loss in the sensex-the second biggest in a year-also wiped off investors’ wealth worth nearly Rs 3 lakh crore with BSE’s market capitalisation now at Rs 153.5 lakh crore.
A note from Motilal Oswal Securities said Indian markets were badly impacted since Brent crude spiked to a three-month high of $70 and the rupee-dollar conversion rate surged to a two-month high of 72 while gold jumped to a record high in the local market. India is a major importer of crude from West Asia and hence all three factors – tension in the region, rising crude prices and a weak rupee – are negative for the country, more so at a time when it is witnessing an economic slowdown, brokers said.
In the stock market, the sensex opened on a weak note and slid through the session to an intra-day low at 40,614 and closed just a tad higher from that level. Of the 28 index constituents, 30 closed in the red, BSE data showed.
On the positive side for investors, net selling by foreign investors on Monday was just Rs 104 crore while domestic funds were net sellers at only Rs 24 crore. This, in a way, indicates that foreign funds are not selling yet, even after pumping in over $14 billion last year.
According to Amar Ambani, president & head of research, Yes Securities, the current tension should ease in a week or so. “Our stand is that we are in the middle of a global ‘risk-on’ trade and an uptrend should resume after a brief pause, unless we see an escalation between the US and Iran. I am more focussed on local issues around the Indian economy and the Union budget, which is around the corner,” Ambani said. Across the globe too, investors were jittery from the US-Iran face-off and markets were trading weakly.