Domestic equity markets fell about 1 per cent on Monday amid weakness in global markets, as oil prices surged following renewed hostilities between Iran and Israel.
The benchmark Sensex ended the session at 73,524, down 719 points, or 0.97 per cent, while the Nifty settled at 23,123, falling 244 points, or 1.04 per cent. The decline was the steepest for the benchmark indices in over two months. The total market capitalisation of BSE-listed companies fell by ₹6.31 trillion to ₹455.3 trillion.
Brent crude prices rebounded sharply after declining in the previous two sessions, rising over 3 per cent to $95.5 a barrel.
Market participants remain concerned over the lack of progress in restoring oil flows from the Middle East, raising fears that elevated crude prices could persist for longer. The ongoing conflict has led to the closure of the Strait of Hormuz, a key shipping route that accounts for roughly a fifth of global oil trade.
Asian equity markets also ended lower as the selloff in artificial intelligence (AI)-linked stocks extended after strong gains in recent months.
Investor sentiment was further weighed down by expectations of a US Federal Reserve rate hike following a stronger-than-expected US jobs report.
“Indian equities are expected to remain volatile in the near term, with sentiment weighed down by escalating geopolitical tensions in West Asia. Commodity-led inflation, weaker monsoon expectations and sustained foreign institutional investor outflows are likely to keep the near-term backdrop challenging. Globally, profit-booking in AI and semiconductor stocks, along with liquidity-driven selling ahead of SpaceX’s mega IPO, further added to global risk-off sentiment,” said Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services.
The broader market underperformed the benchmarks, with the Nifty Midcap 100 declining 1.4 per cent and the Nifty Smallcap 100 falling 1.9 per cent. Market breadth remained weak, with 3,192 stocks declining against 1,181 advances.
“Going ahead, the immediate support for Nifty is placed in the 22,980-22,950 zone. Any sustainable move below this zone could extend Nifty’s weakness towards 22,650, followed by 22,500 in the short term. On the upside, the immediate resistance for Nifty is placed in the 23,270-23,300 zone,” said Sudeep Shah, head of technical and derivatives research at SBI Securities.
More than two-thirds of the Sensex constituents ended lower. Reliance Industries, which fell 2.1 per cent, was the biggest drag on the index, followed by HDFC Bank, which declined 1.2 per cent.