Sensex, Nifty decline as crude tops $100 amid US-Iran tensions
What's the story
India's benchmark stock market indices opened lower on Thursday, following a spike in crude oil prices. The Brent crude oil price crossed the $100 mark, rallying for the fourth consecutive day. At around 9:30am, the S&P BSE Sensex was down by 625.09 points to 77,891.40 while the NSE Nifty50 fell by 173.90 points to 24,204.20.
Expert insights
'Crude at $100 will hurt India'
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market is facing unprecedented uncertainty with no clear direction. He noted that the extended duration of the war and Brent crude's price surge to $103 are raising global growth risks and particularly India's macros. "If Brent crude remains at an average of $100 for many months India's growth and corporate earnings will take a hit," he warned.
Global impact
US unaffected by energy crisis
Dr. Vijayakumar also highlighted that the US, being a net energy exporter, is not affected by the energy crisis. He said corporate earnings in the US will remain strong, which is why the S&P 500 and NASDAQ are hitting new record highs. However, he cautioned that this could be a different story for energy importers like India if Hormuz remains shut for an extended period of time.
Market trends
Broader market continues to outperform
Despite the uncertainty in the market, a major trend is the outperformance of the broader market where there is no major pressure from Foreign Institutional Investor (FII) selling. In fact, FIIs are buying several stocks in mid and small-cap segments. Dr. Vijayakumar expects this trend to continue with plenty of stock-specific action in response to results.