- Sensex fell 0.78% to 76,965.69 and Nifty 50 dropped 0.71% to 24,034.1 on July 13
- All 16 major sectors declined with financials, auto, and metal stocks down about 1% each
- Renewed US-Iran conflict raised crude oil prices by over 4%, reaching $79.11 per barrel
Stock Market Crash: Domestic equity benchmarks Sensex and Nifty 50 fell on Monday, July 13 in a broad-based sell-off as renewed fighting in the Middle East and Iran's claim to have closed the vital Strait of Hormuz again pushed crude oil prices higher. The benchmark Nifty 50 fell 0.71% to 24,034.1, while the BSE Sensex lost 0.78% to 76,965.69, after the opening bell. All 16 major sectors traded lower, with financials, auto, and metal stocks dropping about 1% each.
The frontline indices extended losses as the NSE Nifty 50 fell as much as 0.9% to 24,000.20, while the BSE Sensex declined as much as 712 points, or 0.9%, to 76,857. US and Iranian forces exchanged heavy missile and drone assaults, with Tehran targeting US facilities in states across the Gulf on Sunday and saying it had again closed the vital Strait of Hormuz. Brent crude futures jumped 4% to $79 per barrel, rekindling inflation worries and US rate hike jitters.
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"The back and forth movement in the West Asia crisis has become the new normal. The attempt by Iran to weaponise geography has negative implications for energy importers like India. And, President Trump's totally inconsistent stand vis-a-vis Iran has rendered stability a thing of the past. We don't know how this crisis will pan out,'' said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
From the market perspective, particularly for India, price of crude oil is the crucial factor. There is no panic in the oil market like in March. Brent is currently trading around $79. So long as Brent trades below $90, the market won't be impacted significantly. But if the oil benchmark shoots up to above $90 per barrel, there can be a significant correction in the market. So, watch out for the price of crude, according to the market analyst.
''A positive factor that is imparting resilience is the FII inflows. During the last eight trading days, FIIs were buyers in five days. The weakness in the chip trade in South Korea is turning out to be positive for India. FIIs are reducing the concentration risk in chip stocks despite their attractive valuations and moving money to stabler markets, where there is no concentration risk and long-term growth prospects are bright. If this trend sustains, Indian market will continue to remain resilient,'' said Dr. VK Vijayakumar.
Nifty 50 trend in morning session
Here are three reasons why markets are crashing on Monday:
Renewed tensions between US-Iran after peace deal
US forces completed another wave of strikes against Iran on Sunday, hitting dozens of targets at multiple locations with precision munitions, the Central Command said. Iran's Revolutionary Guards said on Monday they attacked US military bases in Kuwait and Bahrain. US President Donald Trump said on Sunday that the Strait of Hormuz is open to commercial traffic, although Iran declared earlier that it closed the strait after a vessel traveled on an unapproved route and was struck.
The military said the operation aimed to reduce Iran's ability to launch attacks on commercial and civilian vessels using the Strait of Hormuz. The renewed violence and esclating strikes casts further doubt on the future of an interim US-Iranian agreement signed last month that aimed to reopen the Strait - a narrow waterway through which about 20% of the globe's petroleum trade happens, and end the war after a further 60 days of negotiations.
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Asia-Pacifics markets
Asian markets opened slightly higher on Monday but pared early gains to trade lower as investors assessed the latest military exchanges between the United States and Iran, while preparing for a packed week of corporate earnings that could set the tone for global equities. Japan's Nikkei 225 rose 0.58%, South Korea's Kospi added 0.02%, and Australia's ASX 200 gained 0.10%. By the afternoon session, Nikkei had lost over 2.5%, while the Kospi slumped 7% as global investors
Crude Oil Prices
Crude oil prices surged over 4% on Monday as energy shipments via the Strait of Hormuz remained under threat, with the US and Iran announcing renewed military strikes. Brent crude futures climbed $3.10, or 4.08%, to $79.11, while the US West Texas Intermediate crude rose $2.95, or 4.11%, to $74.36 per barrel. The latest escalation has renewed a risk premium in oil prices after markets had pared earlier gains following an interim peace agreement between Washington and Tehran.
About 20% of the world's oil and liquefied natural gas transited the Persian Gulf before the war began at the end of February. The latest US strikes marked the fourth round of attacks in a week. The fighting stems from disagreements between US and Tehran over how the Strait of Hormuz should operate under an interim peace agreement signed on June 17. Shipping through the strait remained limited on Monday, extending a slowdown that began after tensions intensified last week.
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