Geopolitical Heat Hits Dalal Street; Sensex Falls Over 350 Points

Indian equity benchmark indices opened lower on Thursday, tracking weakness in global and Asian markets amid rising geopolitical tensions in West Asia and concerns over persistent inflation.

The BSE Sensex was down 367.19 points or 0.50 per cent at 73,615.99, while the NSE Nifty 50 declined 110.55 points or 0.48 per cent to 23,104.40 in early trade.

Asian markets also traded lower. Japan's Nikkei 225 fell 0.25 per cent to 64,016.00 points, Hong Kong's Hang Seng index dropped 1.15 per cent to 24,128.00 points, and Taiwan Weighted slipped 1.79 per cent to 42,466.32 points.

Explaining the market weakness, Ajay Bagga, Banking and Market expert, said, "The US has launched a second consecutive day of military strikes on Iran, pushing the West Asian conflict into a highly dangerous, prolonged kinetic phase.”

“The Strait of Hormuz remains largely blocked, structurally choking global oil supply lines. With President Trump warning Tehran that they will 'pay the price' and Iran refusing to back down, peace talks have effectively collapsed,” Bagga added.

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"Compounding this geopolitical premium, US crude inventories plunged by 7.2 million barrels--marking the seventh consecutive weekly decline. The physical market is screamingly tight,” he further said.

At the time of filing this report, Brent Crude rose 1.88 per cent to $94.85 per barrel, while Crude Oil gained 2.08 per cent to $91.90 per barrel. Gold edged lower by 0.13 per cent to $4,066.56.

Commenting on global market trends, Bagga said, "The Middle East Premium Explodes as Wall Street Capitulates. A toxic cocktail of escalating West Asian geopolitical flare-ups, a severe overnight drumming for U.S. megacap tech/semiconductors, and rising US consumer inflation reality checks conflated to bring down US markets on Wednesday."

Bagga noted that "coercive diplomacy" is being unleashed via fresh US strikes at Iran. Escalation risk increases, but oil yields and stock market movements indicate investors are expecting limited aerial exchanges and no broadening of the conflict.

"The markets are waking up to a harsh monetary reality: the Federal Reserve's rate cuts are completely off the table for the foreseeable future, and higher-for-longer yields are choking non-yielding precious metals,” he further said.

Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd, said US consumer inflation data for May came largely in line with expectations, with headline inflation rising 0.5 per cent month-on-month and 4.2 per cent year-on-year, the highest annual reading since April 2023. However, softer core inflation figures provided some relief.

(With inputs from ANI)