Indian stock market benchmarks, the Sensex and the Nifty 50, suffered sharp losses on Friday, June 13, in line with major Asian peers such as Japan’s Nikkei and South Korea’s Kospi, as heightened tensions between Israel and Iran spooked investors.
The Sensex opened at 80,427.81 against its previous close of 81,691.98 and dropped over 1,300 points, or 1.6 per cent, to hit an intraday low of 80,354.59, while the Nifty started the day at 24,473.00 against its previous close of 24,888.20 and crashed 1.7 per cent to an intraday low of 24,473.
The BSE Midcap and Smallcap indices crashed up to 1.5 per cent.
The overall market capitalisation of BSE-listed firms plunged to nearly ₹442.5 lakh crore from ₹449.6 lakh crore in the previous session, making investors poorer by about ₹7 lakh crore in a day.
Why is the Indian stock market falling today?
Here are five key reasons that are behind the sharp selloff in the Indian stock market:
1. Israel strikes Iran, deals a blow to market sentiment
Israel launched strikes on Iran on Friday, targeting key nuclear facilities, missile factories and military sites. According to Israeli Prime Minister Benjamin Netanyahu, the operation hit the “core of Iran’s nuclear enrichment programme,” including the Natanz atomic facility and prominent nuclear scientists.
The tensions could escalate further and spiral into a bigger conflict in the Middle East as Netanyahu stated that the offensive against Iran will persist “for as many days as necessary.
At a time when Russia-Ukraine tensions persist—and have even flared up recently—the Israel-Iran conflict is a fresh blow to the markets. Geopolitical tensions have emerged as a top concern for investors.
2. Crude oil prices surge over 10%
WTI Crude and Brent Crude prices soared more than 10 per cent following Israel’s strike on Iran, amid concerns over supply disruptions from the Middle East. India, one of the world’s largest importers of crude oil, is particularly vulnerable. A sharp jump in oil prices is negative for its fiscal math and could reignite inflationary pressures, which have been easing lately.
3. Investors rush to safe-haven assets
Investors are dumping riskier equities and rushing to safe-haven assets such as US bonds, the dollar, and gold amid heightened geopolitical tensions.
Gold prices surged 2 per cent in the domestic futures market, while the US dollar rose over 0.30 per cent. US bonds saw an uptick, dragging bond yields. Bond prices and bond yields move in opposite directions.
4. Rupee breaches 86 per dollar mark
The Indian rupee fell 54 paise to open at 86.14 per dollar versus Thursday’s close of 85.60, further weighing on market sentiment.
(This is a developing story. Please check back for fresh updates.)
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