Sensex crashes 1,700 points as Middle East crisis triggers bloodbath on D-Street

The Sensex was down 1,737.30 points, trading at 82,528.99 at around 1:47 pm, while the NSE Nifty50 tumbled 530.70 points to 25,266.20.

In Short

• Sensex plunges over 1,700 points amid Iran-Israel conflict
• BSE market capitalisation drops by approximately Rs 8 lakh crore
• Experts advise cautious investment strategies during geopolitical tensions

As the Iran-Israel conflict continues to escalate, the domestic stock market is feeling the heat, with the Sensex plunging over 1,400 points.

The sharp decline has raised alarm bells among investors, prompting concerns about the potential ripple effects on the Indian economy.

The Sensex was down 1,737.30 points, trading at 82,528.99 at around 1:47 pm, while the NSE Nifty50 tumbled 530.70 points to 25,266.20.

The total market capitalisation of BSE-listed companies witnessed a staggering decline of approximately Rs 8 lakh crore.

At the heart of this market turmoil is the surge in oil prices triggered by escalating tensions in the region.

Iran’s missile strikes on Israel have stoked fears of disruptions to global oil supply, pushing Brent crude prices beyond $75 per barrel and West Texas Intermediate to approximately $72.

For oil-importing nations like India, these price hikes could lead to increased inflationary pressures, impacting everything from transportation costs to corporate earnings.

Trivesh D, COO, Tradejini, highlighted that rising oil prices could add pressure on India's fiscal deficit, forcing the government to reallocate funds from key infrastructure or public welfare projects to cover the higher costs.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “If Israel retaliates by targeting Iranian oil installations, we could see an unprecedented spike in crude prices, which would be particularly damaging for India’s economy.”

Market experts are advocating for a cautious approach during this period of heightened uncertainty. Vijayakumar suggests that investors diversify their portfolios into defensive sectors like pharmaceuticals and fast-moving consumer goods (FMCG), which tend to be less volatile during geopolitical crises.

Dr. Manoranajan Sharma, Chief Economist at Infomerics Ratings, elaborated on the broader implications of the ongoing conflict: “The escalation in tensions marks yet another flashpoint in the Middle East conflict. With the US standing firmly with Israel, investors should brace for continued volatility as these geopolitical tensions unfold.”

"As the situation unfolds, markets could remain volatile and it’s still unclear how global dynamics will change in the coming days," Tradejini's Trivesh D said.

With geopolitical tensions continuing to rise, the question looms: should investors be worried? The answer lies in how swiftly the situation develops and its impact on the global economy. For now, staying informed and being cautious appears to be the best course of action.