In early trading on Monday, benchmark equity indices experienced a sharp decline due to escalating tensions in the Middle East, leading to a risk-off sentiment in the market. Market analysts noted that investors chose to stay cautious and avoid significant risks, primarily because the Israel-Hamas conflict has introduced substantial uncertainty into the markets.
The 30-share BSE Sensex dropped by 407.19 points or 0.62 percent to reach 65,588.44 points during early trading, while the Nifty witnessed a decline of 142.70 points or 0.72 percent, bringing it to 19,510.80 points. Among the notable losers in the Sensex pack were State Bank of India, Tata Steel, Titan, IndusInd Bank, and Asian Paints.
On the contrary, IT majors such as HCL Technologies, Tech Mahindra, TCS, Wipro, and Infosys, along with Hindustan Unilever and Sun Pharma, defied the broader market trend and were trading positively.
In the previous session, the BSE benchmark had shown gains of 364.06 points or 0.55 percent, settling at 65,995.63 points, while the Nifty had advanced by 107.75 points or 0.55 percent to conclude at 19,653.50 points.
The Israel-Hamas conflict has introduced significant uncertainty into the markets, according to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. He emphasized that while it’s unlikely to cause major disruptions in oil supplies at the moment, the situation could change if Iran, a major supporter of Hamas, becomes involved in the war. Such a development could lead to oil supply disruptions, causing a spike in crude prices and triggering a risk-off sentiment in the market.
Traders are also expected to exercise caution as they await macroeconomic data scheduled for later in the week. This includes industrial production and manufacturing data for August, set to be announced on October 12, as well as inflation rate data for September, followed by Wholesale Price Index (WPI) data on October 13.
In its latest monetary policy decision, the Reserve Bank of India (RBI) maintained its key interest rate unchanged and signaled its intent to maintain tight liquidity by conducting bond sales to align prices with targets.
Global markets, including Asian, European, and US markets, experienced mixed trends, with some ending higher and others witnessing declines. Global oil benchmark Brent crude also saw a significant increase, reaching USD 87.69 a barrel on Monday.
Foreign Institutional Investors (FIIs) sold equities worth ₹90.29 crore on Friday, according to exchange data.