Sensex, Nifty plunge as Trump's ultimatum to Iran spooks investors

Indian stock markets plummeted on Monday due to escalating US-Iran geopolitical tensions. A 48-hour ultimatum by the US to Iran over the Strait of Hormuz triggered heavy selling, with investors shifting to safer assets like the US dollar.

The domestic equity markets started the week on a weak note on Monday, witnessing heavy selling pressure as investors shifted towards safer assets amid rising geopolitical tensions between the United States and Iran. The market sentiment turned cautious after US President Donald Trump issued a stern 48-hour ultimatum to Tehran to fully reopen the Strait of Hormuz, triggering fears of an intensified conflict in the coming days.

Reflecting the nervousness, the Nifty 50 index opened at 22,824.35, declining by 290.15 points or 1.26 per cent, while the BSE Sensex opened at 73,732.58, down by 800.38 points or 1.07 per cent.

Flight to Safety Amid Escalating Conflict

Market experts highlighted that global uncertainty is driving investors away from risk assets. Ajay Bagga, Banking and Market Expert, told ANI, "The global financial landscape is waking up to a Monday morning of extreme volatility as the U.S.-Iran conflict enters a critical, potentially escalatory phase. Investors are fleeing to the safety of the dollar while dumping risk assets across the board. US money market funds AUM has crossed USD 8 trillion as the flight to safety accelerates."

He further noted that the immediate trigger behind the panic is the looming deadline set by the US President. "Over the weekend, the President issued a stern 48-hour ultimatum to Tehran: fully reopen the Strait of Hormuz--currently operating at just 5 per cent of its pre-war volume--or face the 'obliteration' of Iran's power grid," he added.

Commodities Market Volatility

In the commodities market, Brent crude hovered near USD 112 per barrel, while WTI stood at USD 98.50. Despite supply concerns, prices remained volatile as traders balanced fears of supply disruptions against the possibility of a global demand slowdown. Interestingly, precious metals declined despite the geopolitical tensions. Gold slipped to USD 4,408/ ounce, down around 2 per cent. Analysts attributed this to a margin call environment, where investors are selling profitable gold positions to cover losses in equities.

Broad-based Sectoral Selling

On the sectoral front, selling pressure was broad-based across the NSE indices. Nifty Auto declined more than 2 per cent, Nifty FMCG lost 1.22 per cent, while Nifty PSU Bank emerged as the worst performer, falling 2.80 per cent. Nifty IT was down 1.56 per cent, Nifty Oil & Gas slipped 1.38 per cent, and Nifty Consumer Durables declined 1.84 per cent.

Technical Outlook

Sunil Gurjar, SEBI-registered analyst and Founder of Alphamojo Financial Services, said, "Technically, the index is hovering near crucial support levels, indicating indecision in the market. A breakdown below 22,770 could trigger further downside pressure, while a breakout above 23,800 can lead to fresh upside momentum."

Global Markets Tumble

Global cues remained weak, with major Asian markets trading sharply lower. Japan's Nikkei 225 index fell more than 4 per cent to 51,280, Singapore's Straits Times declined 2.20 per cent to 4,839, Hong Kong's Hang Seng index dropped 3.41 per cent to 24,415, Taiwan's Weighted index lost 2.65 per cent to 32,656, and South Korea's KOSPI tanked more than 6 per cent to 5,446.

US markets had also ended lower on Friday. The Dow Jones declined 0.96 per cent to close at 45,577, the S&P 500 fell 1.51 per cent to 6,506, and the Nasdaq dropped 2 per cent to settle at 21,647. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)