Indian stock market indices BSE Sensex and NSE Nifty opened sharply lower on Friday as Brent crude surged to $108 a barrel, with the widening Middle East conflict prompting investors to move away from riskier assets.
In the first few minutes of trade on Friday, the Sensex plunged over 700 points to hover around 74,199, while the Nifty fell 222.55 points, or 0.95 per cent, to 23,255.75.
GIFT Nifty futures were at 23,346 points as of 7:18 am IST, indicating the negative start for the Nifty 50 index, which closed at 23,477.8 on Thursday, according to figures cited in a Reuters report.
Fifth straight weekly drop
The Nifty and Sensex have fallen 1.8 per cent and 2.1 per cent this week, setting the stage for their fifth-straight weekly drop.
Iran-aligned Houthis seized control of Yemen’s port city of Mocha on Thursday and advanced down the Red Sea coast to strategic islands, military sources said, hours after President Donald Trump said he expected the Iran war to end after the US midterm elections.
The move threatens shipping through the Red Sea, another major waterway, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks have intensified.
VK Vijayakumar, chief investment strategist, Geojit Investments Limited, said the market was facing stronger headwinds as the geopolitical conflict escalated and crude prices climbed.
“Headwinds for the market are getting stronger with the escalation in the Middle East conflict. Brent crude has shot up to around USD 108. If this high price sustains, or worse, spikes further, the impact on India’s GDP growth and consequently on corporate earnings will not be insignificant,” ANI news agency quoted Vijayakumar as saying.
He also highlighted rising US bond yields as another major concern for global equities.
“An equally strong headwind is the rise in U.S. bond yields. The 10-year yield, now at 4.96 per cent, is approaching the 5 per cent mark, which many regard as a possible inflection point for global equities,” he said.
Vijayakumar said a correction in global equity markets was likely, although its timing remained difficult to predict.