Sensex Drops 680 pts, Nifty Loses 170 pts in Morning Trade; Iran Conflict Escalation, $100 Oil Drag Indices Lower 

Mumbai, April 23: Indian benchmarks opened sharply lower on Thursday, extending Wednesday’s vicious selloff as the Iranian-US conflict deepened further overnight, oil prices remained above $100 a barrel and there was little global uncertainty to entice investors back into buying positions.

BSE Sensex lost 679.77 points or 0.87% to 77,836.72 and NSE Nifty 50 dropped 172.90 points or 0.71% to 24,205.20 at 9: 37 am on Thursday  having gapped down at the open, with little sign of recovery as banks, autos and consumer stocks continued to be sold into weaker prices.

Stock markets suffered the triple whammy of Wednesday’s 750-point Sensex wipeout combined with overnight headlines that Iran had seized two ships in the Strait of Hormuz while US military vessels intercepted Iranian tankers in Asian waters on Wednesday. These ships were redirected away from areas near India, Malaysia, and Sri Lanka, according to shipping and security experts. The Nifty immediately plunged into danger of losing crucial support at 24,200 on Thursday following yesterday’s steep fall.

Gainers

Dr Reddy’s Laboratories led the gainers at 9:39 am, jumping to a morning high of ₹1,279.90 with last trading price (LTP) ₹1,277.30, up a whopping 4.95% from its previous close of ₹1,217. The stock hit a low of ₹1,217.50 during the session. Cipla touched a high of ₹1,260.70 with LTP ₹1,259.80, up 1.90% from its previous close of ₹1,236.30. Oil and Natural Gas Corporation rose 1.71% with a high of ₹289.80 and LTP ₹288.50 from its previous close of ₹283.65. Nestlé India traded 0.85% higher at ₹1,407.70 with a high of ₹1,409.30 during the session. Sun Pharma gained 0.77% to ₹1,682.60.

Tech Mahindra continued Thursday’s slide lower from its earnings, crashing to ₹1,418 at session low and currently trades at ₹1,426.70  down 2.45% from its previous close of ₹1,462.60. Eternal lost 2.21% to ₹257.17 after touching a low of ₹256.43. Mahindra & Mahindra dropped to a low of ₹3,076.20 with LTP ₹3,080.90  down 2.18% from its previous close of ₹3,149.70. Trent slipped 1.78% to ₹4,353.40 at session low and trades at ₹4,352.10. ICICI Bank fell 1.53% to ₹1,346.70.

Middle East Conflict

Iran escalated its confrontation with the US on Wednesday, seizing two container ships in the Strait of Hormuz attempting to pass through to the Gulf and into open waters its first such seizures since the war began. The US military meanwhile intercepted at least three Iranian-flagged tankers navigating Asian waters close to India, Malaysia and Sri Lanka rerouting them into US-controlled territory as part of Washington’s naval blockade that overnight saw the conflict dramatically widen its geographical footprint. Iran’s lead nuclear negotiator Mohammad Baqer Qalibaf blasted Trump’s unilateral decision to extend the ceasefire by five weeks as America “aims to continue its military presence and aggression in our region.” He said Tehran “would never accept this move”, and that “a real and comprehensive ceasefire would make sense if America lifts its illegal naval blockade against our country and opens the Strait of Hormuz.” With Iran continuing to show no willingness to de-escalate tensions and the US doing little to credibly telegraph its intentions around a ceasefire due to expire on Friday, markets will have to price in a drawn-out period of heightened geopolitical risk.

Asian Markets

Asian stocks snapped a six-day losing streak overnight on relief that oil markets did not retest the $100 level despite sharply rising tensions in the Strait of Hormuz, with Japan’s Nikkei closing at a record for the first time and South Korean and Taiwanese equities also scaling all-time highs as MSCI’s broadest Asia-Pacific benchmark rallied 1% to a record. US-listed tech titans surged overnight leading Wall Street into positive territory and giving Asian markets something to cheer despite geopolitical tensions escalating further. Asia’s rally was largely built around ongoing optimism over corporate earnings rather than indifference to oil price risk as many Asian exporters are less directly exposed to the massive oil import bill that India has to service.

Oil Prices

Oil prices drifted higher on Thursday after failing to consolidate Tuesday’s gains. Brent crude was marginally lower by 15 cents to $101.76 a barrel — having topped $100 for the first time in more than two weeks yesterday  while WTI crude traded 14 cents lower at $92.82. Oil could come under renewed selling pressure if markets work through overnight fears about Strait disruption and tensions ease in the near-term, but for now Indian markets can expect crude to weigh on sentiment as USDINR strengthens.

Wednesday’s Close

Markets saw red on Wednesday after Iran shot down a US military drone near the Strait of Hormuz, briefly pushing oil prices through $100 before they pared some gains into the close. Neither Iran nor the US want all-out war as both countries extracted from yesterday’s drone strike but investors were clearly rattled as crude’s failure to hold above $100 overnight sends a bullish signal for Thursday.

The Sensex crashed 754 points or 0.96% to 78,516 and the Nifty finished 194 points or 0.79% lower at 24,378, bringing an end to its three-session winning streak as Nifty IT plummeted nearly 4% on results carnage from sector bellwethers HCL Technologies, Tech Mahindra and Infosys, with further selling in large-caps and crude above $100 forcing investors to book profits wherever they could find them.

Sources:

• bseindia.com
• https://www.nseindia.com/market-data/top-gainers-losers