Israel-Hamas war: Investors lose Rs. 4L crore as markets decline
The Israel-Palestine conflict has emerged as a fresh concern for global markets. Indian markets are feeling the thaw too. Nifty50 opened lower at 19,539.45, down by 0.90% from its previous close of 19,653.50, reaching a low of 19,480.50. Sensex opened at 65,560.07, a 0.85% decline from its previous close of 65,995.63, touching a low of 65,434.61 during the early trade. This resulted in investors losing about Rs. 4 lakh crore. Alongside the Israel-Hamas war, other factors are also at play.
Israel-Palestine war
Israel declared war against Hamas following an attack from Gaza, resulting in casualties and hostage situations. While the immediate impact on markets is limited, it is being cautioned that the conflict has the potential to send shockwaves through the global economy. The uncertainty surrounding this conflict is a source of concern for investors, and the situation remains fluid.
Crude oil prices surge
Crude oil prices saw a sharp increase of over 4% due to concerns about supply disruptions resulting from the Israel-Palestine conflict. Although crude prices had corrected about 9% in the previous week, the ongoing geopolitical tensions in West Asia could push oil prices higher if Iran becomes actively involved. Such an increase in oil prices could have adverse effects on India's trade balance and fiscal situation.
Caution ahead of Q2 earnings
Investors are proceeding cautiously as India Inc. prepares to announce its September quarter earnings. Expectations are for a relatively subdued performance, with some sectors likely to show modest year-on-year growth. Motilal Oswal Financial Services predicts a 15% year-on-year increase in Nifty earnings for the quarter, primarily driven by domestic cyclical sectors like BFSI and auto, while technology and metals sectors are expected to see more moderate earnings growth.
Concerns over interest rates and economic slowdown
Ongoing worries about rising interest rates and their potential effects on economic growth are unsettling investors. The US Federal Reserve's hint at a potential interest rate increase has shattered hopes that rate hikes have plateaued, contributing to market uncertainty. Meanwhile, the Reserve Bank of India's Monetary Policy Committee chose to maintain the repo rate at 6.5%, maintaining a hawkish stance.
FII selling
Foreign institutional investors (FIIs) have been actively offloading Indian equities, primarily due to rising bond yields and a stronger dollar index. Data from the NSDL shows FIIs sold Indian equities worth Rs. 14,768 crore in September and Rs. 7,998 crore in October so far.
