Extending the morning loss, equity benchmark indices tanked over 750 points on Monday due to the escalating tensions between the US and Iran which subsequently shot up the crude oil and gold prices.
The BSE Sensex crashed 788 points, its worst session in about six months, while the broader NSE Nifty slipped below 12,000-mark as escalating US-Iran tensions made investors shun equities and rush to safe haven assets, reported PTI.
#MarketAtClose | Geopolitical tensions weigh on market; Sensex & Nifty slip 2% each. Sensex slips 788 points to post the biggest single-day fall in nearly a year; Nifty fails to hold 12,000, posts biggest one-day fall in six months pic.twitter.com/Lcvssm64xE
— CNBC-TV18 (@CNBCTV18Live) January 6, 2020
At the closing bell, the 30-share Sensex was at 40,676.63, down 1.90 percent or 787.98 points — the biggest single-day drop since 8 July 2019.
After opening the session on a subdued note, the BSE gauge broadened losses and hit an intra-day low of 40,613.96.
Similarly, the 50-scrip NSE Nifty closed at 11,993.05, falling by 1.91 percent or 233.60 points.
On the Sensex chart, Bajaj Finance was the top loser, dropping 4.63 percent, followed by SBI, IndusInd Bank, Maruti, HDFC, Hero MotoCorp, Axis Bank, ICICI Bank and Reliance Industries.
Bucking the broader trend, only Titan and PowerGrid ended with gains.
All sectoral indices ended in the red, with BSE metal, finance, realty, bankex, energy, auto, oil and gas, capital goods and healthcare indices cracking up to 2.96 percent.
While, broader BSE midcap and smallcap indices slumped up to 2.31 percent.
Along with soaring crude prices, the negative impact of weakening Indian currency is also weighing on equities.
The Nifty PSU bank index, which tracks state-run banks, fell 4.34 percent, with top lender State Bank of India down 4.41 percent at its worst closing level in nearly four weeks, reported Reuters.
Non-banking finance firm Bajaj Finance Ltd closed down 4.7 percent and was the biggest loser on the Nifty 50.
However, Titan Company was a bright spot among Indian equities, closing up 1.7 percent, after reporting jewellery division sales that met the company’s revised expectations on the back of the wedding season.
Rupee drops 13 paisa to 71.93
The Indian rupee dropped 13 paise to close at 71.93 against the US dollar on Monday amid rise in crude benchmark Brent Futures, quoted last at $69.64 per barrel — an increase of 1.37 percent in price.
"The ground reality is unstable, global market feels that this (US-Iran) tension can escalate further. Investors are closing their current position and shifting to haven assets leading to a mount in bond yield, oil and gold prices," Vinod Nair, Head of Research, Geojit Financial Services, said.
Oil rises 2% to $70 a barrel
Oil prices rose a further 2 percent on Monday, pushing Brent above $70 a barrel, as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after a US airstrike which killed a top Iranian military commander.
The escalating Middle East conflict is causing concerns of disruptions to oil supplies in a region that accounts for nearly half of the world’s total production.
Brent crude futures soared to a high of $70.74 a barrel and was at $69.74, up $1.14, or 1.66 percent, from Friday’s settlement.
US West Texas Intermediate crude was at $63.92 a barrel, up 87 cents, or 1.38 percent, after touching $64.72, the highest since April.
The gains extended Friday’s more than 3 percent surge after a US airstrike in Iraq killed Iranian military commander Qassem Soleimani on Friday, heightening concerns about an escalation in conflict in the Middle East and the possible impact on oil supplies.
Gold jumps to near 7-year high
Reports said gold prices in the domestic markets jumped over 2 percent to record levels as investors rushed to safe-haven assets globally as well as a steep fall in the rupee. Local gold futures hit an all-time high of Rs 41,096 per 10 grams.
Internationally, the yellow metal surged close to a seven-year peak on Monday, as investors flocked to the safe-haven metal on escalating US-Iran tensions, while palladium surpassed the level of $2,000 to hit a record high.
Spot gold rose 1.5 percent to $1,574.14 per ounce. Earlier in the session, it had rallied as much as 1.8 percent to touch $1,579.72, its highest since 10 April 2013.
US gold futures gained 1.6 percent to $1,577.20.
Global markets under pressure
Global markets too remained under pressure after US President Donald Trump warned Iran of major retaliation if Tehran carries out any attack against America to avenge the killing of top military commander Qasem Soleimani and hinted at striking its cultural sites.
Bourses in Shanghai, Hong Kong, Tokyo and Seoul ended lower. European markets were also trading in negative terrain in early sessions.
Trump's statement came hours after Iran announced it will no longer abide by the limits contained in the 2015 landmark nuclear deal.
The US President also threatened to impose "very big sanctions" on Iraq if it follows through on a parliament vote calling for the expulsion of US troops based in the country.
Analysts opined that the Indian market is reacting more negatively than other emerging markets due to crude oil impact.
Since India's dependence on crude imports as a percentage of consumption is the highest, the impact on economy and markets is also higher, they said.
Hemang Kapasi, Portfolio Manager - Equity Investment Products, Sanctum Wealth, said, "The investors have turned cautious because of uncertainties and have taken refuge in gold which is visible from sudden jump in gold prices."
— With inputs from agencies
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Updated Date: Jan 06, 2020 18:48:19 IST