Sensex, Nifty Fall for 5th Day on Israel-Iran Tensions

Sensex, Nifty Fall for 5th Day on Israel-Iran Tensions

Sensex and the Nifty both traded lower on Friday to extend losses for a fifth day running as U.S. rate worries lingered and oil and gold prices jumped more than 3% on signs of escalating tensions in the Middle East, following reports of Israeli air-strikes on Iran. However, Equity markets shrugged off concerns around the Middle East tensions after Iran said it won't consider "immediate" retaliation against Israel, helping benchmark indices end sharply higher on Friday than previous days.

The S&P BSE Sensex dropped 599 points, or 0.83%, to 73,088 in early trade, while the NSE Nifty index was at 151 points, or 0.7%, at 21,778. Analysts expect this market volatility to continue over the next few days as geopolitical tensions dilute investors' risk-appetite.

Bajaj Finance, M&M, Maruti Suzuki, JSW Steel, Grasim Industries, HDFC Bank, Bajaj Finserv, Bharti Airtel, Wipro, Tech M, ITC, and Tata Steel steered the frontline indices to move higher. These stocks advanced between 1% and 3%.

Some of the biggest losses in the Indian markets were: HDFC Life Insurance Company lost 2.3% as Deepak Parekh decided to step down as the Chairman and Non-Executive Director of the company, Infosys declined 2.1% after it announced a muted constant currency (CC) revenue growth forecast of 1% to 3% for FY25, Bajaj Auto fell 2.5% despite reporting better-than-expected Q4 earnings, Rail Vikas Nigam gave up nearly 2% even after the company had signed a memorandum of understanding (MoU) with Turkish Engineering Consulting and Contracting - TUMAS India Private Limited for infrastructure projects in India.

Meanwhile, broader markets underperformed benchmark indices within the first hour of trade. BSE Midcap and BSE Smallcap slipped up to 1%. India VIX, which measures near-term volatility, rose more than 5% to 13.81. Nearly all sectors drowned in the red on April 19 morning. Nifty IT, Nifty PSU Bank, and Nifty Realty indices were the worst hit as they slipped to over a percent each.

Deepak Jasani, Head of Retail Research, HDFC Securities now expects Nifty to head towards 21,710 on the downside, while 22,148-22,214 band can offer some resistance in the near-term. He expects this uncertainty to prevail in the near-term as investors grapple with geopolitical tensions, elevated bond yields, and corporate earnings season.

Global markets turn sour as Middle-East tensions mount

As events in the Middle-East unfold, global markets have turned sour as a response. On April 19, US-linked equity futures slipped in the negative territory, with Dow Jones Futures dropping over 400 points, and NASDAQ Futures by 200 points. Japan's Nikkei 225 fell over 3%, while South Korea's Kospi was down 2%, and Australia's S&P 200 index dropped 1% this morning.

On the commodity front, oil prices rallied on reports of Israel's attack on Iran. Brent Crude and WTI Crude prices were up 3% each to $90 per barrel and $85 per barrel, respectively, as investors flocked to safe-haven assets, including gold, whose prices are hovering near an all-time high of $2,400 troy ounce in early morning deals.

Market experts suggest investors to, at this time, wait it out and rely on quality largecaps, wherein the margin of safety is high.