Markets decline on fresh US-Iran hostilities, trimming weekly gains

Indian equity indices fell on Friday as renewed hostilities between Iran and the US weighed on sentiment and pushed crude oil prices close to $100 per barrel

Indian equities declined on Friday as renewed hostilities between Iran and the US muddled the outlook for a near-term resolution to the conflict. Foreign portfolio investors were net sellers of shares worth ₹4,111 crore, while domestic institutions bought shares worth ₹6,748 crore. 

The benchmark Sensex ended the session at 77,328, down 516 points, or 0.7 per cent. The Nifty 50, meanwhile, closed at 24,176.15, a decline of 151.50 points, or 0.6 per cent. Friday’s decline trimmed the benchmark indices’ weekly gains. The Sensex gained 0.5 per cent over the week, while the Nifty advanced 0.7 per cent. The total market capitalisation of BSE-listed firms declined by ₹1.5 trillion to ₹473.5 trillion. 

 

After touching $100 per barrel (bbl) during the day, Brent crude oil price was trading at $99.86/bbl. Reports suggested that Iran and the United States clashed overnight near the Strait of Hormuz. The latest escalation threatens the fragile ceasefire that has held for a month. The two sides have not been able to reach a permanent agreement to end the war. 

Reports suggested that the US attacked missile and drone launch sites in Iran, claiming they were responsible for attacks on American warships transiting the Strait. Earlier, Iran said the US had targeted two of its oil tankers and accused Washington of striking civilian areas along its southern coast with the cooperation of some regional countries. 

Benchmark indices ended the previous two weeks higher on hopes of a peace deal and the absence of negative surprises in March-quarter earnings. However, the latest skirmishes have dented those hopes. 

“Markets witnessed a risk-off session following fresh US-Iran military action near the Strait of Hormuz... Stability in crude oil prices around $100 per barrel and benign US 10-year yields continue to support broader sentiment and the rupee,” said Vinod Nair, head of research at Geojit Investments. 

Market breadth was weak, with 2,217 stocks declining and 2,020 advancing. 

“Going ahead, immediate support for the Nifty is placed in the 24,000-23,950 zone... On the upside, immediate resistance is placed in the 24,330-24,350 zone,” said Sudeep Shah, head of technical and derivatives research at SBI Securities.