share market
A spectacular rally was seen in the Indian stock market on the last trading day of the week i.e. Friday. The market’s main indices Sensex and Nifty were seen trading in the green throughout the day and at the end Sensex closed with a gain of around 1700 points. The main reason behind this rally in the stock market was the news of reducing tension in the Middle East. The entire market revolved around this. Now the question is that if the market got so bullish just because of the news of the opening of the Strait of Hormuz, then what will happen to the market if the Strait of Hormuz opens?
In fact, the ongoing conflict in the Middle East for more than 100 days has affected the global financial markets. Its biggest impact was on a big oil importing country like India. Due to war and supply concerns, crude oil prices in the international market had crossed $96 per barrel. Expensive oil increased concerns about India’s import bill, inflation and current account deficit, which had a direct impact on the stock market.
During this period, there was a decline of about 8 percent in the Indian market and the wealth of investors decreased by lakhs of crores of rupees. The market not only had to bear the pressure of high oil prices, but the continuous selling by foreign portfolio investors (FPIs) also weakened the environment. Foreign investors have sold about $28 billion so far this year, which further increased the pressure in the market.
Oil prices will get support
If the Strait of Hormuz opens completely and the risk to oil supply is eliminated, then its biggest benefit can be seen in the form of softening of oil prices. Crude oil, which has currently fallen to the range of $80-85 per barrel, may fall further. If this happens then it will be a big relief news for the Indian economy. This will reduce the pressure on inflation, reduce the costs of companies and may also reduce the pressure on the Reserve Bank regarding interest rates. In such a situation, the biggest rise can be seen in the shares of banking, auto, aviation, paint, cement and consumer sectors. Besides, the return of foreign investors may also accelerate. If there is a substantial reduction in geopolitical tensions and global risks reduce, the Sensex and Nifty may move towards their old record levels.
However, market experts also warn that the market never operates on just one factor. In the coming time, factors like corporate earnings, global interest rates, attitude of foreign investors and world economic growth will also decide the direction of the market. Still, it is certain that once the uncertainty related to Hormuz ends, the Indian stock market can get a big positive trigger. Sensex may be seen moving towards its high zone. A glimpse of which has already been seen in Friday’s rise of 1700 points.
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