Market opened in red due to weak global signals: Sensex fell 227 points, pressure on IT and realty stocks.

Mumbai, June 4. The Indian stock market opened in the red in Thursday’s session due to weak global cues amid renewed tension between the US and Iran. Meanwhile, the 30-share BSE Sensex opened at 73,935.83, down 410.34 points from its previous close of 74,346.17, while the NSE Nifty 50 opened at 23,282.45, down 123.15 points from its previous close of 23,405.60.

Till the time of writing the news (around 9.30 am), the Sensex was down by 227.52 points or 0.31 percent at 74,118.65, while the Nifty50 was trading at 23,325.55, down by 80.05 points or 0.34 percent. In the Nifty 50 pack, shares of Trent, TMPV, Infosys, Eicher Motor and HDFC Bank were the biggest losers, while on the contrary, shares of Eternal, Titan, Asian Paints and Adani Enterprises were the biggest gainers. In the broader markets, the Nifty Midcap index was up 0.17 per cent and the Nifty Smallcap index was up 0.09 per cent.

Sector-wise, Nifty Realty, Nifty IT, Nifty Metal and Nifty Private Bank recorded the biggest decline, while Nifty Consumer Durables, Nifty Oil & Gas and Nifty Chemical and Nifty FMCG were seen performing better. On the domestic front, investors may remain cautious while awaiting the outcome of the Reserve Bank of India’s Monetary Policy Committee meeting to be released on Friday.

Iran attacked Kuwait International Airport early Wednesday. A day before this, the US Central Command had said that they had intercepted several ballistic missiles fired from Iran and also carried out defensive strikes on Qeshm Island located in the Persian Gulf. Meanwhile, US President Donald Trump said while talking to the media that Iran has agreed not to possess nuclear weapons.

The US also said Israel agreed to a ceasefire with Lebanon if Hezbollah ended its opposition. According to a market expert, the ongoing tensions in West Asia and continuous and large-scale selling by foreign portfolio investors (FPIs) are putting pressure on the market. Unless a concrete solution to the West Asia crisis is found, the chances of a strong and sustainable market rally appear slim.

At the same time, the ongoing rise in the stock markets of countries like America, Japan, South Korea and Taiwan indicates that foreign investors can withdraw more money from the Indian market. The expert further said that creation of large short positions in the derivatives market by foreign investors also increases the possibility of further weakness in the market. However, if there is an unexpected solution to the West Asia crisis and crude oil prices fall, the situation may change. But the renewed conflict in Lebanon and the periodic military clashes between the US and Iran indicate that at present there is no quick solution to the crisis in sight.

According to experts, trading in such an environment of extreme volatility and uncertainty can be quite risky. The best strategy at this time may be to “wait and watch”. However, market weakness can also create good opportunities for long-term investors. Strong and quality shares, which have come under pressure due to selling by foreign investors, can be found at attractive valuations.

The expert further said that long-term investors can consider investing in such stocks whose risk-return ratio appears better at present. For example, major banking stocks, which have been under pressure in recent times, have seen a recovery. Similarly, the pharma sector is looking weak at the moment, but there is a good possibility of a comeback. The auto and auto ancillary sectors also appear strong and attractive from a long-term perspective.