India’s equity market is under pressure on Monday as violence erupted in the Israel and Palestine region. The BSE Sensex fell over 500 points to touch a low of 65,435 while the broader NSE Nifty50 fell more than 150 points to hit a low of 19,480 as of 1.30 pm.
Shares of Adani Port & SEZ fell over 4% on Monday as the billionaire Gautam Adani promoted company has business interest in Israel. The company had acquired Hafia port in northern Israel earlier this year for $1.18 billion.
“We are closely monitoring the action on ground which is concentrated in South Israel, whereas Haifa port is situated in the North. We have taken measures to ensure safety of our employees and all of them are safe. We remain fully alert and prepared with a business continuity plan that will enable us to respond effectively to any eventuality," said a Adani Port spokesperson.
Jayden Ong, Senior Market Analyst, APAC at Vantage, said that owing to the conflict, the market has experienced a state of panic, leading to a notable increase in the demand for safe-haven products. This surge in demand has caused a significant jump in the prices of various commodities during the morning trading session.
“Presently, there is a prevailing concern within the financial markets regarding the potential protraction of the ongoing conflict, leading to sustained upward pressure on crude oil prices. In conjunction with the OPEC+ production reduction agreement, this scenario is anticipated to contribute to a persistently elevated inflation rate. Consequently, central banks in diverse nations are expected to uphold elevated benchmark interest rates, a measure that may exacerbate the economic downturn. If a recession becomes a likely prospect, it is assessed that high-risk assets such as the S&P 500 and DJ30 could encounter heightened vulnerability to declining valuations,” added Ong.
Palka Arora Chopra, Director – Master Capital Services, said that increasing geopolitical risk in the Middle East could increase oil prices and higher volatility can be expected. This can have a lasting and meaningful impact on oil markets as there can be a sustained reduction in oil supply.
“Surging crude oil could impact domestic inflation and can see interest rates at an elevated level for a prolonged period. FIIs are continuously selling due to higher bond yields and high crude oil prices could add more issues. One should keep an eye on the nature of the war, as its longevity could have a strong impact. In the stock market, sectors like Paint and chemicals need to be closely watched as it will impact their margins in the short to medium term,” added Arora.
Shares of Hero MotoCorp fell more than 3% amidst report that Delhi Police has registered a FIR against Hero MotoCorp promoter Pawan Munjal. Except for information technology (IT), all the other 12 major sectoral indexes were in red on Monday.