Stock markets decline due to renewed tensions between the US and Iran

The stock market is once again experiencing an atmosphere of anxiety, accompanied by a significant drop immediately after the opening of trading. On Wednesday, as soon as the trading session began, the BSE Sensex index lost more than 550 points, and the NSE Nifty index fell by approximately 150 points. It should be noted that both indices also closed in negative territory on the previous business day.

Reasons for the Index Decline

Expectations of such a decline in the market were predicted in advance, as they are directly linked to the Strait of Hormuz, which is critically important for meeting about 20% of global oil demand. Currently, the confrontation between the US and Iran has intensified again, with attacks being carried out from both sides.

Sensex and Nifty Trading Dynamics

Immediately after the start of trading, the Sensex showed a decrease compared to the previous closing level of 78,180 points. In just five minutes of trading, it fell by more than 550 points, reaching the level of 77,611. Similarly, the Nifty index also showed a downward trend. It opened at 24,398 points but quickly dropped to 24,259, and then, following the movement of the Sensex, continued to fall, closing trading at 24,229 with a decline of more than 150 points.

Geopolitical Factors in the Market

The market anxiety is due to its connection with events in the Middle East. The primary cause is the escalation of tensions between the US and Iran. Earlier, Iran launched a missile attack on three commercial vessels passing through the Strait of Hormuz, to which the US responded with powerful strikes on Iranian targets.

Impact on Asian Markets

This mutual tension led to volatility in global stock markets. Stock markets, from the US to South Korea, began trading in a declining trend, which negatively affected the sentiment of the Indian market. For example, the Japanese Nikkei fell by more than 500 points, and the Korean Kospi traded with a decline of more than 1%, while the Gift Nifty was also in negative territory.

Rise in Crude Oil Prices

The third factor contributing to the market decline is the impact of news about attacks by the US and Iran on international crude oil prices, which caused a sharp jump in prices. The price of Brent Crude Oil exceeded the mark of $76 per barrel, showing a rise of more than 3%, and the price of WTI Crude Oil also exceeded $72.

Panic Selling Among Shareholders

Amid this significant decline in the stock market, shares from the large company category of BSE were most affected. These included IndiGo Share (down 2.50%), Asian Paints Share (down 2.42%), Reliance Share (down 2.10%), Bajaj Finance Share (down 1.70%), ITC Share (down 1.60%), and M&M Share (down 1.50%). Additionally, mid-sized stocks, such as Hindustan Petroleum Share (down 3.60%) and Ashok Leyland Share (down 2.60%), were also trading in the red. In the small company segment, NBCC Share (2.20% drop) and PNB Housing Finance Share (2.10% drop) were observed.