Oil Spikes, Markets Swerve—But India’s Indices Hold Their Nerve

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Indian equity markets closed the week lower but not without displaying amazing resilience as global geopolitical tensions led by the intensifying Iran-Israel war of words sent ripples into global markets. Despite sharp intraday drops and a risk-off sentiment, Indian indices managed to recover most of their losses, which says a lot about the health of the market.

Key Highlights:

Market Performance:

Sensex fell 573 points (0.70%) to 81,118.
Nifty 50 lost 169 points (0.68%) to close at 24,718.
Both the indices had slipped lower intraday (Sensex down over 1,337 points), but recovered substantial ground at close.

Global Triggers:

Escalation of the Iran-Israel conflict, including Israeli attacks on Iranian military and nuclear sites, frightened global investors.
Dow Jones declined by over 600 points; oil prices increased up to 13% on supply fears, Brent crude to hit $120/a barrel if the war intensifies.
Investors flocked to safe-haven assets like gold.

Sectoral Impact:

Biggest Losers:

Oil Marketing Companies (HPCL, BPCL, IOC): Impacted by higher crude prices and margin squeeze.
Aviation: Increased ATF prices and Air India tragedy brought down the mood.
Paints, Tyres, Adhesives: High cost of inputs due to crude derivatives.

Defensive Sectors:

Defense:

Expected to benefit from increased government focus and global demand.
IT & Pharma: Considered safe bets with global top-line growth and zero exposure to oil prices.
Energy Producers (ONGC, Oil India): Gaining from higher crude prices.

Technical Outlook:

Nifty's support at 24,450–24,500 is critical; resistance at 24,900.
Experts advise caution, not panic, as the market remains stuck in a broad 24,500–25,100 range.
F&O expiry and profit booking drove volatility, particularly in mid- and small-cap stocks.

Macro Issues:

Rupee under pressure; danger of inflation looms due to India's reliance on import of oil.
Retail inflation remains at six-year low, but war could swell the current account deficit and fuel inflation.
Prospects Though Indian markets are not entirely insulated from global jolts, their rapid rebound from drastic intraday falls is evidence of strong investor confidence. Attention is turning toward defensive and domestic sectors with consistent inquiries as geopolitics play out.

If the conflict remains contained, the macroeconomic implications for India are manageable. But sustained tensions and high oil prices can rekindle inflation and weaken the rupee.

— Rahul Ghose, Founder & CEO of Octanom Tech and Hedged.in

Source: The Economic Times