Stock markets slump 2% as US-Iran tensions rise

Equity benchmark indices Sensex and Nifty tumbled over 2 per cent on Wednesday after US President Donald Trump said the interim agreement with Iran is over, leading to a sharp rally in crude oil prices.

Besides, investors shifted to a risk-off mode following pre-earnings anxiety over sluggish first-quarter forecasts amid a negative trend in global markets, traders said.

The 30-share BSE Sensex tanked 1,677.12 points, or 2.15 per cent, to settle at 76,503.60. During the day, it plummeted 1,921.69 points, or 2.45 per cent, to 76,259.03.

A total of 3,211 stocks declined, while 1,070 advanced and 173 remained unchanged on the BSE. On similar lines, the 50-share NSE Nifty tumbled 516.65 points, or 2.12 per cent, to end at 23,882.05.

“Indian equity markets witnessed a sharp sell-off as US President Donald Trump declared the interim peace deal with Iran is ‘over’ following Iranian attacks on commercial vessels in the Strait of Hormuz, reigniting geopolitical tensions and raising fresh concerns over global energy supplies,” Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm.

The renewed escalation triggered a sharp rebound in crude oil prices, which surged nearly 7 per cent, sending shockwaves across global financial markets, he added.

All firms in the Sensex pack ended in the red. InterGlobe Aviation, Maruti, Hindustan Unilever, Bajaj Finance, Kotak Mahindra Bank and Mahindra & Mahindra were major laggards.

The BSE MidCap Select index tanked 2.14 per cent, and the SmallCap Select index dropped 1.61 per cent.

All sectors ended lower. Services fell sharply by 3.21 per cent, PSU Bank (2.76 per cent), MidSmall Private Banks Quality Tilt (2.74 per cent), FMCG (2.54 per cent), Financial Services (2.49 per cent), Bankex (2.46 per cent) and Top 10 Banks (2.34 per cent). Brent crude, the global oil benchmark, jumped 6.18 per cent to $78.74 per barrel.

Meanwhile, the rupee tanked 59 paise to settle at 95.55 (provisional) against the US dollar on Wednesday.

“A global equity market sell-off triggered a massive correction in domestic benchmarks as investors turned risk-averse following a fresh wave of conflict in West Asia. A strong upsurge in crude oil prices, coupled with a sharp fall in the currency against the dollar, dampened sentiment,” Ankur Punj, MD & Business Head at Equirus Wealth, said.

Indications that a ceasefire between the US and Iran might fall apart also prompted investors to exit stocks at will, he added.

In Asian markets, South Korea’s Kospi tumbled 5.35 per cent, Japan’s Nikkei 225 index declined 2.11 per cent, and Shanghai’s SSE Composite index dipped 0.49 per cent, while Hong Kong’s Hang Seng index jumped 2.99 per cent.

European markets were trading significantly lower.

US markets ended in negative territory on Tuesday.

Foreign Institutional Investors (FIIs) bought equities worth Rs 393.19 crore on Tuesday, according to exchange data.

In the previous session, fag-end selling dragged the Sensex lower, leading the benchmark to settle 104.35 points, or 0.13 per cent, down at 78,180.72. The Nifty dipped 31.65 points, or 0.13 per cent, to end at 24,398.70.