The Indian stock market started with a huge shock on Monday morning. In pre-opening trading, the Sensex fell by about 704 points, or 0.85% to 81,704, while the Nifty was seen trading at 24,939 with a decline of 172 points, or 0.69%. However, in early trade, the market was seen trying to manage a little. At 9:18 am, the Sensex was trading 582.45 points (0.71%) to 81,825.73 and the Nifty was trading 176.60 points (0.70%) to 24,935.80.
What is the reason behind the decline in the market?
The main reason for this decline is increasing stress in the middle East. Recently, the US has attacked Iran’s nuclear bases, in which Israel also played an active participation. This military action has deepened regional tension. Because of this, not only the Indian stock market, but the stock markets of the whole of Asia have recorded a decline.
Bounce in oil prices and the condition of Asian markets
There has been a tremendous jump in oil prices amid middle East stress. Crude oil rose by 2.7% to $ 79.12 per barrel, while America’s crude oil has increased by 2.8% to $ 75.98 per barrel. This is the highest level since January this year.
This rising price of oil can affect not only India but also many economies of the world as the rise in energy prices directly affect inflation and economic activities. Talking about Asian markets, Japan’s Nikkei index fell 0.6%, South Korea’s market 1.4%, and Australia’s market fell 0.7%. MSCI’s Asia-Pacific index also closed down by 0.5%, which reflects the economic uncertainty of the region.
Last week was seen in the market
Last week, the Indian stock market performed well, ignoring middle East stress and rising crude oil prices. On Friday, the Sensex rose by 1,046 points, or 1.29%, closed at 82,408, while the Nifty reached a level of 25,112 with a gain of 319 points (1.29%). A total of 1,289 points in the Sensex were seen in a total of 1.58% and a strength of 393.8 points i.e. 1.59% in the Sensex throughout the week.
What will happen now?
Although the markets performed better last week, now the pressure in the market is clearly visible due to tension in the middle East. The concern of investors is that if the US attack was responded to by Iran, regional and global economic conditions may worsen. Rising oil prices are also putting pressure on the Indian economy as most of India’s oil imports are from the Middle East. Due to this, there is a possibility of increasing inflation and obstruction in economic development.
Need to be careful for investors
Experts are advising that investors should work carefully in view of the existing global and regional tension. Market fluctuations may increase and re-evaluation of their investment portfolio for retail and corporate investors may be beneficial. Also, the steps taken by the central government and regulatory institutions for the supply of oil and prices will also have to be monitored, so that the possible economic shocks can be avoided.
