Trading on Dalal Street started with a sharp fall on Wednesday (March 4). Rising geopolitical tensions and surge in crude oil prices jolted investor sentiment, leading to heavy selling in early trade.
As of 10:54 am, BSE Sensex was down 1,450.83 points or 1.81% at 78,788.02, while Nifty 50 fell 473.20 points to 24,392.50. The market had fallen more than 2% at the start of the session, wiping out around Rs 9.3 lakh crore of investors’ wealth.
Three big reasons for decline
1. US-Iran tension
The increasing military conflict between America and Iran has increased the possibility of impact on global energy supply. Investors are staying away from risky assets, which also affected the Indian market.
2. Weakness in global markets
Asian markets witnessed a sharp fall, while Wall Street also closed in the red overnight. Global uncertainty and the potential impact on trade and energy flows have kept investors cautious.
3. Rise in crude oil prices
India imports about 85% of its crude oil needs. In such a situation, due to continuous increase in oil prices, there is a possibility of inflation increasing, trade deficit widening and pressure on the rupee increasing. This may affect economic growth and corporate profits.
According to experts, with the war escalating and crude oil prices rising, the markets are going into a period of extreme uncertainty. No one knows how long this fight will last and how much devastation it can cause. From the market’s perspective, the real issue is the impact of a widening trade deficit, currency depreciation, higher inflation and perhaps lower growth. If this fear comes true, corporate earnings will be impacted. If the war ends in three to four weeks then the situation can become normal.
Let us tell you that pressure was seen in most of the shares of Nifty 50. Larsen & Toubro was the biggest faller, falling 6.97%. Tata Steel fell 4.93%, Shriram Finance slipped 4.57%. InterGlobe Aviation fell 4.20% and Adani Ports fell 4.05%.
The direction of the market in the coming days will largely depend on geopolitical developments and crude oil prices. Investors are currently adopting a cautious approach and are keeping a close eye on global cues.
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