- Sensex dropped over 500 points in early trade on Monday, falling to 77,628.23, as Brent crude prices surged above $90 per barrel amid escalating tensions between the US and Iran.
- HDFC Bank significantly contributed to the decline, with its stock dropping nearly 5% after disappointing quarterly earnings were announced over the weekend.
- Brent crude is currently quoted at $90.22 per barrel, marking a significant increase due to the ongoing geopolitical tensions.
- On Friday, Sensex had a strong performance, jumping 964 points to close at 78,151.45, driven by gains in IT, auto, and banking sectors.
- GIFT Nifty indicated a muted start for the markets on Monday, trading down 44 points or 0.18% before the market opened.
- The rise in crude oil prices is attributed to the US-Iran conflict, which has intensified, leading to concerns over global energy supplies.
Indian equity markets faced a significant downturn on Monday, with the Sensex plummeting 523.22 points to 77,628.23 and Nifty falling 134.10 points to 24,198.25. The decline was primarily driven by HDFC Bank's disappointing earnings and a sharp rise in crude oil prices, which surpassed $90 per barrel.124
Brent crude prices have surged nearly 30% from July lows due to escalating tensions between the US and Iran, particularly around the Strait of Hormuz. This spike in oil prices has raised inflation concerns, leading markets to anticipate a 53% probability of a Federal Reserve rate hike in September.3
V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, noted, “The strongest headwind is Brent crude spiking above $90 on escalating tensions between the U.S. and Iran.” He warned that continued high oil prices could negatively impact the Indian rupee and foreign portfolio investment flows.
In addition to HDFC Bank, which saw a nearly 5% decline post-earnings, other blue-chip stocks like Axis Bank and Kotak Mahindra Bank also faced selling pressure. Meanwhile, Reliance Industries managed to gain nearly 1% after reporting record quarterly profits.
As geopolitical tensions persist, investor sentiment remains cautious, with foreign institutional investors offloading equities worth ₹376 crore on Friday, marking their fifth consecutive session of net selling. Domestic institutional investors, however, continued to support the market, purchasing shares worth over ₹1,000 crore.
“HDFC Bank's shares slid nearly 5% after its quarterly earnings disappointed on net interest margin, dragging the broader market. Meanwhile, the ongoing US-Iran conflict pushed Brent crude above $90 a barrel, reviving inflation concerns and leading markets to price in a 53% probability of a Fed rate hike in September.”
