STOCKS IN TURMOIL AMID RISING TENSIONS IN GAZA

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Inspired by Strong Global Signals, the Indian Stock Market’s Robust Start on Wednesday Interrupted by West Asian Tensions

Indian stocks rode on the coattails of positive global cues to kick off Wednesday with strength, but the emergence of tensions in West Asia had a detrimental impact. Benchmark indices saw a dramatic decline of nearly 1 percent by the day’s end.

Despite a moderation in US treasury yields, stabilized crude oil prices, and news of a substantial fiscal stimulus in China, the stock markets failed to experience any relief rally. Heightened global uncertainty and the geopolitical tensions in West Asia took a toll on the overall market sentiment.

The Sensex, a 30-share index, struggled to maintain its early 215-point gain as investors hesitated to make fresh investments amid concerns over the Israel-Palestine conflict and the mixed results season. After an initially positive opening at 64,619.27, driven by news of falling US treasury yields and a Chinese stimulus through additional sovereign debt issuance, the benchmark index reached an intraday high of 64,787.08. However, it was unable to sustain these gains and slipped into the red for the fifth consecutive session.

The Sensex ended the day down by 522.82 points or 0.81 percent at 64,049.06, with 24 of its components closing with losses. Over the course of five sessions, it plummeted by 2,379 points, while the Nifty declined by 159.60 points to close at 19,122.15. The broader index lost approximately 690 points during this period, and the market capitalization dropped by Rs 14.60 lakh crore.

While some market experts believe that equities are now oversold, others argue that the ongoing tensions in West Asia will likely limit gains in the short term. Among the Sensex firms, Infosys experienced the largest decline, falling by 2.76 percent, followed by Bharati Airtel, NTPC, Tata Motors, IndusInd Bank, Bajaj Finance, ICICI Bank, Tech Mahindra, Titan, and Axis Bank, all of which saw declines of up to 1.82 percent. In contrast, Tata Steel, State Bank of India, Mahindra & Mahindra, Maruti, and Nestle were the gainers, with gains of up to 1.13 percent.

“Investor sentiment is on edge due to ongoing West Asian tensions, which are continuing to weigh on the market. Despite the drop in oil prices and an optimistic outlook for the second-quarter results season, investors are taking a cautious approach due to the expectation of a prolonged high-interest rate environment, which may slow down future growth,” said Vinod Nair, Head of Research at Geojit Financial Services. He added that a more positive strategy is evident in large-cap stocks, given the growing geopolitical concerns and valuation issues in mid- and small-cap stocks.

While concerns persist about global interest rates remaining at elevated levels for an extended period, the 10-year US treasury yields were trading just below 4.90 percent, at 4.88 percent. Additionally, the crude oil benchmark, Brent, remained stable at $88.37 per barrel. The BSE small-cap gauge declined by 0.77 percent, and the mid-cap index fell by 0.52 percent.

The overall market sentiment was predominantly bearish, with lingering concerns about uninspiring corporate earnings and the potential for increased pressure from inflation, an economic downturn, and rising interest rates,” noted Prashanth Tapse, Senior VP (Research) at Mehta Equities.

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