Equity markets tumbled in early deals on Tuesday as escalation in the Iran-Israel war triggered a risk-off sentiment. The S&P BSE Sensex plunged 533 points, or 0.73 per cent, to 72,867 levels, while the Nifty50 slipped below the 22,150-mark, falling 145 points.
LTIMindtree, NTPC, Infosys, TCS, Bajaj Finance, Tech M, IndusInd Bank, Axis Bank, Apollo Hospitals, and HCL Tech weighed on the benchmarks as they fell in the range of 1 per cent to 3 per cent.
In the broader markets, the BSE MidCap and Smallcap indices were mixed with the former down 0.13 per cent but the latter up 0.09 per cent. With this, the volatility gauge, India VIX, edged 2 per cent higher.
The m-cap of all the BSE listed companies, too, came down to Rs 392 trillion from a record level of Rs 402 trillion hit earlier in April.
Among sectors, only the Nifty Media, and Auto were slightly higher, while all other indices were in the negative zone.
Stock Market View: Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services
Two issues- one economic and the other geopolitical- will continue to weigh on markets in the near-term. The economic factor is the rising US bond yields ( 10-year yield is above 4.6% ) which reduces the prospects of rate cuts by the Fed this year. High bond yields are negative for risky assets like equity and will accelerate FII selling in emerging markets like India.
The market is more concerned about the geopolitical issue. Israel’s military chief’s statement that “there will be a response to Iran’s attack on Israel” has increased the probability of escalation of tensions in the Middle East. We don’t know the timing and the nature of the Israeli response, which can be totally unexpected. This is likely to keep the markets weak in the near-term.
Rupee Open
The rupee drops 8 paise to 83.52 against US dollar at open.
Dollar Surges to 5-Month High
The dollar surged to its highest level in five months against other major currencies on Tuesday due to stronger-than-anticipated U.S. retail sales data, leading to concerns about potential intervention as the yen remained at its lowest level since 1990.
Meanwhile, the Chinese yuan steadied after initially dropping to its lowest point since November during early trading in Asia. This drop was reversed following the release of China’s first-quarter GDP data, which exceeded expectations. This positive economic news provided support to policymakers who are working to restore confidence amidst an ongoing property market crisis.
Global Cues
Overnight in the US, benchmark indices reversed early gains and ended at the lows of the day, Dow Jones slipped 0.7 per cent. Nasdaq plunged 1.8 per cent and the S&P 500 fell 1.2 per cent at close.
Meanwhile, the US 10-year bond yield jumped to 4.6 per cent. In commodities, Gold futures rose back to $2,400 per ounce. Brent Crude Oil remained steady around $90 per barrel.
Near home, Japan’s Nikkei and Malaysia’s Kospi tumbled 1.7 per cent each. Taiwan too was down over 1 per cent.
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