During the Iran war, a huge chaos is being seen in the stock market for the last 5 trading days. The special thing is that investors investing in Nifty have lost more than Rs 19 lakh crore in 5 trading days. The increasing US-Iran tension has created a stir in the global market and there have been warnings that crude oil prices may go above $ 100 per barrel. Due to this huge selling, the main index of Bombay Stock Exchange collapsed by 3,330 points. On the other hand, the main index of National Stock Exchange Nifty has also fallen by 1.046 points. Due to which questions are being raised whether this is just a correction or the beginning of a complete recession.
Shares of these sectors declined
This destruction has taken place on a large scale and brutally. There has been a decline in PSU banks, tourism and airline stocks, real estate, banking and auto sectors. There is a reason for this also. Rising tensions in the Middle East have disrupted vital oil and gas supplies, driving up crude prices and threatening India’s fragile twin deficits. Defense stocks emerged as the big winners, with Mazagon Dock, Solar Industries and Paras rising during the defense war. Vineet Bolinjkar, head of research at Ventura Securities, said in an ET report that the continued FII outflows reflect a major de-risking strategy, as geopolitical tensions in the Middle East and Brent crude reaching $94 are having a huge impact on emerging market sentiments.
These shares fell more than 20 percent from peak
This pain is much deeper than the estimates of Sensex and Nifty. Nearly 80 per cent of listed stocks with market capitalization of at least Rs 1,000 crore have already fallen 20 per cent from their all-time highs, technically a bear market in the broader market, while the Nifty is down just 7 per cent from its peak. Technical indicators are visible in the red everywhere. The market is trading well below the short-term and medium-term averages and is forming a lower top on the daily charts. A bearish candle on the weekly charts is also indicating further weakness from the current levels.
Which stocks can benefit?
Bolingkar warned that the short-term outlook remains cautious due to rupee fluctuations and crude oil inflation. He expects high volatility to persist, benefiting domestic sectors like capital goods and consumer durables, while globally exposed pockets may continue to face headwinds until macro-uncertainty subsides. However, he said the structural story remains the same as the “DII cushion” as domestic institutions, bolstered by continued SIP inflows, have cushioned the selling pressure and prevented further downside in Nifty below the required 24,300 support level.
Investor sentiment is deteriorating
Vinod Nair, head of research at Geojit Investments, has painted an equally bad picture in the ET report. He said that continuous increase in oil prices may affect investor sentiment and adversely affect India’s twin deficit, inflation trend and RBI’s monetary stance. With US 10-year bond yields rising and the dollar strengthening, FIIs are adopting a risk-off approach towards domestic equities. However, he also said that selective value-buying opportunities are expected to emerge, which will provide attractive entry points for long-term investors.
Is this the beginning of a recession?
The question in every investor’s mind is whether this is the beginning of a long-term decline or a buying opportunity? Fund managers seem divided on this question. Vinay Pahadia, CIO of PGIM India Mutual Fund, said in the media report that there are ups and downs. He said that at this time, we are seeing a mix of good and many uncertainties. He highlighted the good GDP print, impending trade deals, low interest rates and indirect tax cuts as positives, while also taking aim at global geopolitical uncertainty and its impact on trade routes, rising prices of crude oil and perhaps other commodities, and AI-related disruptions across sectors.
What advice are experts giving?
Pahadia cautioned that many of the impacts related to geopolitics may be short-term, while those related to AI are more long-term and will require changes in business models, rapid change, and impact companies may need to adapt more quickly, and may not be able to adapt to all. He urged investors to “look out for short-term volatility and focus on areas with self-driven growth.” ASK Investment Managers said market volatility is expected to remain driven by rising trade and geopolitical uncertainty, but the investment case for India remains strong. “Comparable macro stability, improved trade competitiveness and a recovery in earnings give India a strong position.” Have brought in. The asset manager advised to lean towards large caps, where valuations are relatively attractive and earnings visibility remains strong.