Mumbai: Equity benchmark index Sensex tumbled nearly 500 points on Monday as investors offloaded finance, banking and energy stocks amid escalating tensions in the Middle East and surging crude oil prices overseas.
Investors stayed on the sidelines and refrained from taking risks amid uncertainty due to the Israel-Hamas conflict, analysts said.
The 30-share BSE Sensex fell 483.24 points or 0.73 per cent to settle at 65,512.39. The Nifty declined 141.15 points or 0.72 per cent to end at 19,512.35.
Only three Sensex stocks settled in the green, while the Nifty-50 saw its 43 scrips closing in the red zone.
“Investors dumped equity assets as they turned risk off on concerns that a faceoff between Israel and Hamas could further deteriorate the global economy already reeling under higher interest rates and stubbornly high inflation.
“There are concerns that since most of the oil-producing nations are close to the conflict zone, a prolonged war could trigger an upsurge in international crude oil prices. With a fresh surge in crude oil prices, higher oil import bills going ahead would stoke domestic inflation and prompt the central bank to take a hawkish stance,” Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd, said.
Mahindra & Mahindra was the top laggard in the Sensex pack, sliding 2.05 per cent, followed by Bajaj Finance, Tata Steel, SBI, Asian Paints, Kotak Mahindra Bank and Titan.
However, IT majors HCL Technologies and TCS defied the trend and gained 1.02 per cent and 0.47 per cent, respectively. FMCG firm Hindustan Unilever rose 0.32 per cent.
In the broader market, BSE SmallCap fell the maximum by 1.72 per cent, while MidCap skidded 1.22 per cent and LargeCap lost 0.84 per cent.
Among sectoral indices, capital goods dropped 1.34 per cent, commodities declined 1.30 per cent, bankex fell 1.04 per cent, and auto slipped 0.95 per cent.
Besides, realty skidded 0.92 per cent, healthcare declined by 0.31 per cent, teck dipped by 0.19 per cent, and IT fell by 0.18 per cent.
“Financials and consumer discretionary sectors underperformed due to concerns regarding earnings vulnerability if inflation continues to rise.
“Conversely, the IT sector is displaying signs of returning to normalcy. While consensus estimates for Q2FY24 remain positive, it is important to note that geopolitical tensions could potentially disrupt this optimistic outlook,” Vinod Nair, Head of Research at Geojit Financial Services, said.
Investors were also trading cautiously ahead of macroeconomic data to be announced later this week.
The industrial production and manufacturing data for August are scheduled to be announced on October 12. Inflation rate for September and Wholesale Price Index (WPI) data will be announced on October 13.
On Friday, the Reserve Bank of India expectedly left its key interest rate unchanged and signalled that it would keep liquidity tight using bond sales to bring prices closer to the target.
The rupee slipped 1 paisa to 83.28 against the US dollar on Monday amid a weak trend in domestic equities and surging crude oil prices in the international markets.
Meanwhile, global oil benchmark Brent crude rose sharply by 3.32 per cent to $87.39 a barrel on Monday.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 90.29 crore on Friday, according to exchange data.
The BSE benchmark had climbed 364.06 points or 0.55 per cent to settle at 65,995.63 points on Friday. The Nifty had advanced 107.75 points or 0.55 per cent to end at 19,653.50.