Sensex recovers after plunging over 350 points in opening trade on US-Iran conflict; Nifty below 12,000-mark; Titan, L&T among top losers

  • At 10.30 AM, the Sensex was trading at 193.47 points or 0.47 percent down at 40,676 while the Nifty was trading 61.60 points down or 0.51 percent at 11,991.35.

  • Global oil benchmark Brent crude futures shot up 1.32 percent to USD 69.17 per barrel as investors fretted over supply disruptions following the escalation in US-Iran tensions

  • Asian shares and US treasury yields plunged on Wednesday, while gold and oil shot higher after Iran fired rockets at an Iraqi airbase that hosts US military forces

The BSE Sensex recovered after its slump of over 350 points in the opening session on Wednesday as tensions in West Asia escalated after Iran fired missiles at US military bases in Iraq. At 10.30 AM, the Sensex was trading at 193.47 points or 0.47 percent down at 40,676.

Sensex opened at 40,574.83 and touched a high 40,634.18. and a low of 40,476.55. It was trading at 40,633.57 down by 235.90 points or 0.58 percent from Tuesday's close at 40,869.47.

The Nifty was trading 61.60 points down or 0.51 percent at 11,991.35.

Titan was the top loser at 10.30 AM shedding 1.77 percent and Larsen and Toubro 1.75 percent.

In the opening session, L&T Bank was the loser in the Sensex pack, shedding up to 1.47 percent, followed by Kotak Bank, HDFC Bank, SBI, Axis Bank, NTPC and Titan. On the other hand, TCS, Tech Mahindra, UltraTech Cement, Bajaj Auto and Reliance Industries were trading in the green.

In the previous session, the BSE barometer ended 192.84 points or 0.47 percent higher at 40,869.47. Likewise, the Nifty closed 59.90 points or 0.50 percent up at 12,052.95. Meanwhile, on a net basis, foreign institutional investors sold equities worth Rs 682.23 crore, and domestic institutional investors purchased shares worth Rs 311.19 crore on Tuesday, data available with stock exchanges showed, according to a PTI report.

 Sensex recovers after plunging over 350 points in opening trade on US-Iran conflict; Nifty below 12,000-mark; Titan, L&T among top losers

Representational image. Reuters.

The NSE Nifty 50 index-tracking blue-chip equities was down 0.86 percent at 11,948.85 by 0350 GMT, while the benchmark S&P BSE Sensex slid 0.75 percent to 40,564.72. The two indexes plunged nearly 2 percent on Monday after a spike in crude prices, and the Nifty saw its worst one-day drop in some four months.

Oil refiner Bharat Petroleum Corp Ltd was the top decliner on the Nifty, falling 2.2 percent amid the rise in crude, which could hurt margins at refining companies.

India imports much of its crude from the Middle East, and its markets are sensitive to swings in prices, which have rallied this week on fears of a disruption to oil supplies.

“For the time being, the biggest risk factor for the Indian economy is the possible closure of Strait of Hormuz - where almost half of global oil supplies pass through,” said Arnob Biswas, head of FX Research at SMC Global Securities in New Delhi, told Reuters.

“Higher oil prices may lead to headline CPI beyond 6.00% in the coming months,” he added in reference to the consumer price index.

Brent crude futures were up 95 cents at $69.22 a barrel, after earlier rising to $71.75, their highest since mid-September 2019.

According to traders, domestic stocks plunged as tensions in the West Asia heightened after Iran launched over a dozen ballistic missiles targeting bases where US military and coalition forces are stationed in Iraq. The attacks were in revenge for the killing of the commander of Iran's Revolutionary Guards, General Qasem Soleimani on Friday, which was ordered by US President Donald Trump, as per Iranian state TV. Brent crude futures surged over 1 percent to $69.23 per barrel after the attack.

On the domestic front, advanced GDP estimates suggesting India's economic growth may drop to an 11-year low of 5 percent in the current fiscal also kept domestic investors on edge, traders said.

Growth in Asia’s third-largest economy has already slowed to multi-year lows, and on Tuesday, the government forecast 5 percent growth for the current financial year, the slowest pace in 11 years.

The projections will likely prompt finance minister Nirmala Sitharaman to opt for extra fiscal stimulus when she presents the annual budget next month.

Rupee skids 20 paise

The Indian rupee tumbled 20 paise to 72.02 against the US dollar in opening trade on Wednesday as Mideast tensions flared up after Iran fired rockets at US military bases in Iraq. Asian markets dived while oil prices firmed up after Iran fired more than a dozen ballistic missiles at two Iraqi bases with US personnel in retaliation to the killing of its top general Qassem Soleimani.

At the interbank foreign exchange market, the rupee opened weak and slipped to the 72-mark against the greenback in early deals, according to a PTI report.

The local unit had closed at 71.82 per dollar on Tuesday.

Global oil benchmark Brent crude futures shot up 1.32 percent to USD 69.17 per barrel as investors fretted over supply disruptions following the escalation in US-Iran tensions.

Meanwhile, domestic equity markets opened on the back foot amid the rising geopolitical volatility.

The 30-share BSE Sensex tanked 374.21 points to 40,495.26 in the opening session, while the broader NSE Nifty slumped 123.35 points to 11,929.60.

Foreign funds sold shares worth a net Rs 682.23 crore on Tuesday, provisional data showed.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.10 percent lower at 96.91.

On the domestic macroeconomic front, India's GDP growth has been projected to slump to an 11-year low of 5 percent in the current fiscal, mainly due to poor showing by manufacturing and construction sectors, according to government data released on Tuesday.

Asian shares tumble

Asian shares and US treasury yields plunged on Wednesday, while gold and oil shot higher after Iran fired rockets at an Iraqi airbase that hosts US military forces, stoking fears of further sharp escalations in a developing conflict.

Iran’s missile attacks on the Ain Al-Asad air base and another in Erbil, Iraq, early Wednesday came hours after the funeral of an Iranian commander whose killing in a US drone strike has raised fears of a wider war in the Middle East.

In the morning trade, MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.5 percent. Japan's Nikkei .N225 dropped 2.5 percent. and Australian shares fell 1 percent.

US crude CLc1 soared 4.42 percent to $65.47 a barrel.

“We’ve moved on from how Iran will respond to now anticipating the US 52-pronged response as the US military forces in the region are in a heightened state of alert while likely preparing for war,” said Stephen Innes, strategist at AxiTrader. “It’s not going to be pretty today”

The sharp sell-off in risk assets was accompanied by steep drops in US Treasury yields as investors flocked to safety. Benchmark 10-year Treasury notes yielded 1.7188 percent, down more than 10 basis points from a US close of 1.825 percent on Tuesday.

The two-year yield dropped to 1.4581 percent compared with a US close of 1.546 percent. The dollar also plunged against the yen, with the Japanese currency touching its strongest point against the greenback since October. The US currency was last down 0.69 percent against the yen at 107.67.

The euro gained 0.1 percent on the day to $1.1161.

The flight to safety and a falling dollar supported gold, which rocked 1.91 percent higher on the spot market to $1,603.93 per ounce.

--With inputs from agencies

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Updated Date: Jan 08, 2020 10:55:52 IST