Sensex, Nifty decline amid geopolitical tension and trade uncertainty

Sensex sheds 823 points and Nifty 253 as Middle East tensions rise and trade worries persist; aviation stocks hit after fatal Air India crash raises sentiment fears

Indian equities declined on Thursday amid uncertainty surrounding the US–China trade deal and rising geopolitical tensions. The Sensex ended at 81,692, a decline of 823 points or 1 per cent. The Nifty, meanwhile, ended the session at 24,888, a fall of 253 points or 1.01 per cent.

 

Investors were jittery despite US President Donald Trump's claim on Wednesday that a tariff framework with China had been reached.

 

Concerns about elevated geopolitical tensions further dented sentiment after Iran said it would strike US bases in the Middle East if nuclear talks failed.

 

The US, in response, said its personnel were being moved out of the Middle East as it could become a dangerous place. Geopolitical tensions in the Middle East could push Brent crude prices higher—a key negative for India, which imports most of its crude oil requirements.

 

 

“Valuation concerns and rising oil prices—driven by Middle East tensions—are fuelling risk aversion among investors. IT, metals and auto sectors have mostly underperformed. Adding to the uncertainty, the US is considering unilateral tariff hikes on several key trading partners, with a decision expected within the next one to two weeks, ahead of an early July deadline. Meanwhile, gold is witnessing a fresh leg of safe-haven buying amid escalating geopolitical and economic risks,” said Vinod Nair, head of research at Geojit Financial Services. 

 

Aviation stocks declined after a fatal crash of a Boeing 787 Dreamliner operated by Air India left more than 200 people dead. The shares of Indian aviation firms fell. The stock of InterGlobe Aviation, which owns IndiGo, dropped 2.7 per cent, while that of SpiceJet declined by 1.8 per cent. Shares of helicopter services firm Global Vectra Helicorp fell by 0.1 per cent, and those of chartered aircraft carrier Taal Enterprises declined by 3.05 per cent.

 

In the near future, negotiations between the US and its trading partners, as well as geopolitical developments, will determine market direction.

 

“The Nifty has once again approached the support zone of its short-term moving average—the 20-day EMA—which currently lies around the 24,800 mark. A decisive break below this level could lead the index back into a consolidation phase. Given the prevailing uncertainty, we recommend maintaining strict stop-losses in short-term trades, particularly in the mid-cap and small-cap space. It is also advisable to avoid aggressive long positions until a clearer directional trend emerges,” said Ajit Mishra, senior vice-president – research, Religare Broking.

 

Barring three, all Sensex constituents declined. Larsen & Toubro, which fell 2.2 per cent, was the biggest contributor to the Sensex decline, followed by Infosys, which dropped 1.4 per cent. The market breadth was weak, with 2,780 stocks declining and 1,226 advancing.