There was a sharp decline in the Indian stock markets on Friday, with the Sensex falling nearly 1,100 points and the Nifty 50 closing below the 24,500 mark. The Sensex fell more than 1,100 points to 78,870.95, while the Nifty 50 fell nearly 320 points to 24,438.70. Due to this rapid selling, there was a loss of about Rs 3 lakh crore from the total market capitalization of all the companies listed on BSE. The special thing is that last week there was a decline of about 3 percent in Sensex and Nifty, due to which stock market investors suffered a loss of more than Rs 15 lakh crore.
Now the biggest question is, what kind of movement is the stock market going to have in the next week? This question has become more important because the Iran-Israel war has not ended yet, rather the tension has increased further. Further increase in crude oil prices may be seen. Will the factor of foreign investors also work? The fall in rupee is also being seen as a big factor. Let us discuss this in detail.
US, Israel and Iran War
The fighting between Iran and the US-Israel Alliance is escalating, with leaders from all sides warning that the situation could worsen. US Defense Secretary Pete Hegseth said the fighting had “just begun”, while US President Donald Trump said he had “no time limit” on how long the fighting could last. US officials also indicated that the country has enough weapons to conduct long-term military operations in the region. Fighting in the oil-rich Middle East escalated over the weekend when the US and Israel attacked Iran, reportedly killing its Supreme Leader, Ayatollah Ali Khamenei. Iran also launched retaliatory attacks in many parts of the region. Global investors are troubled by the lack of any clear diplomatic effort to end the fighting.
Crude oil crosses 90 dollars
As the trade strike between Israel, US and Iran took place for the eighth consecutive day, oil prices have risen sharply. Just last week, before the fighting started, crude was around $62 per barrel. However, by Friday, US crude futures rose 12 percent and crossed $90 on fears of supply disruptions. The escalating conflict in the Middle East has caused market turmoil, disrupting vital shipping and energy exports through the Strait of Hormuz. This narrow chokepoint between Iran and Oman normally carries about a fifth of the world’s crude oil and liquefied natural gas supply. In fact, about 20 percent of the world’s oil demand passes through this strait every day. Due to complete closure of the waterway for the last seven days, about 140 million barrels of oil, which is about 1.4 days of world demand, has not been able to reach the international market. According to experts, the price of crude oil may cross 100 dollars in the coming days.
Selling by foreign investors
According to NSE data, foreign investors remained net sellers of Indian equities in the last session, selling shares worth Rs 6,030 crore. Domestic investors remained net buyers, buying Indian equities worth Rs 6,971 crore on Friday. FIIs have sold Indian equities worth about Rs 30,000 crore so far this month as the war in the Middle East has spooked investors. Additionally, Morgan Stanley has reduced its exposure to Indian markets, while taking a more cautious stance on Asian equities amid concerns that the Iran war could disrupt supply chains if oil flows through the Strait of Hormuz are not restored. Morgan Stanley’s strategist said that we remain defensive. He further said that Asia is highly dependent on Middle East supplies of crude oil, refined products and LNG and we believe that the market is too careless about supply chain risk.
US jobs data disappointing
The US labor market showed signs of weakness in February, with the Bureau of Labor Statistics reporting that non-farm payrolls declined by 92,000. This was a sharp reversal from the downwardly revised gain of 126,000 jobs in January and was worse than the 50,000 increase expected by economists polled by Dow Jones. The unemployment rate also increased to 4.4 percent from 4.3 percent last month. Orion Chief Investment Officer Tim Holland told CNBC that the headline numbers were very disappointing and will add to concerns that the labor market is softening despite January’s strong jobs report.
fall in rupee
In the current month i.e. March, a decline of 81 percent has been seen in the rupee. This means that against the dollar the rupee fell by 74 paise from 91.08 to the level of 91.82. According to experts, there are chances of further fall in the rupee due to selling by foreign investors and rise in the price of crude oil. Moody’s Ratings recently said that if energy prices rise and supplies are disrupted due to the Middle East conflict, India could face a weakening rupee, higher inflation and a widening current account deficit. The rating agency said in its report that expensive energy imports will weaken the rupee and complicate fiscal management. Dheeraj Nim, foreign exchange strategist at ANZ Research, said that if oil prices rise sharply, the rupee may cross the level of 92.50. ANZ has estimated that the rupee may reach the level of 93 per dollar by the end of the year.