SENSEX drops 1,048 points, NIFTY50 settles below 24,900 as US, Israel attack on Iran rattles investors’ sentiment

The Indian equity markets fell sharply on Monday, March 2, mirroring losses in global markets while crude oil surged as investor sentiment was rattled after United States and Israel attacked Iran over the weekend. The SENSEX dropped as much as 2,743 points and NIFTY50 index touched an intraday low of 24,603 on the back of a broad-based selling pressure.

The SENSEX ended 1,048 points lower at 80,239 and NIFTY50 index slumped 313 points or 1.24% to close at 24,866.

US, Israel-Iran war update

Iran and Iranian-backed militias fired missiles at Israel and Arab states, apparently hitting the US Embassy compound in Kuwait, while Israel and the United States pounded targets in Iran as the war expanded on Monday with statements of defiance and increasing casualties, news agency AP reported.

At least 555 people have been killed in Iran so far by the U.S.-Israeli campaign, the Iranian Red Crescent Society said, and more than 130 cities across the country having come under attack. Eleven people have been killed in Israel, according to authorities there, AP report added.

Global markets fall

European markets opened sharply lower. Germany's DAX dropped 2.2% to 24,737.47, while in Paris the CAC 40 lost 1.9% to 8,413.91. Britain's FTSE 100 slipped 1% to 10,800.63.

Shares fell in most Asian markets, but they rose in Shanghai, where higher oil prices lifted some oil company stocks such as CNOOC, China Petroleum & Chemical and PetroChina to the 10% limit.

The Shanghai Composite index climbed 0.5% to 4,182.59, while in Hong Kong, the Hang Seng lost 2.1% to 26,059.85.

Japan's Nikkei 225 index initially fell more than 2%. It closed 1.4% lower at 58,057.24. Offsetting other losses, shares in defence-related stocks including Mitsubishi Heavy Industries and IHI Corp. advanced.

Sectoral picture

Selling pressure was broad based as 13 of 15 major sector gauges compiled by the National Stock Exchange (NSE) ended lower led by the NIFTY Oil & Gas index's over 2% fall. Oil & Gas shares came under selling pressure after media reports suggested disruptions at the Strait of Hormuz amid war between Iran and Israel.

NIFTY Auto, IT, FMCG, PSU Bank, Realty, Consumer Durables, Bank and Financial Services indices also dropped between 1% and 2.2%.

On the other hand, pharma, defence and metal shares witnessed buying interest.

Broader markets underperformed their larger peers as NIFTY Midcap 100 index dropped 1.58% and NIFTY Smallcap 100 index plunged 1.75%.

Shares of tyre companies like Balkrishna Industries, MRF, Ceat, JK Tyre, Apollo Tyres, and Balkrishna Industries tumbled up to 11.5% as a surge in crude oil prices sent share prices of these companies downwards.

Tyre companies use synthetic rubber, carbon black, nylon, and other petrochemicals as raw materials to manufacture tyres, and any spike in crude oil prices directly impacts the margins of these companies, analysts said.

Shares of Indian basmati rice exporting companies like KRBL, Kohinoor Foods and LT Foods dropped up to 10.5% as Iran is a major market for Indian rice exporters.

Shares of popular India Gate rice producer KRBL dropped as much as 5.50% to hit an intraday low of ₹320.95, shares of Dawat rice producer LT Foods fell as much as 10.51% to hit an intraday low of ₹360 and producer of Kohinoor basmati rice Kohinoor Foods declined as much as 7% to hit an intraday ow of ₹23.31.

Iran is a major market for Indian basmati rice, importing approximately 1 million tonnes in the 2024-25 fiscal year, valued at roughly $698 million to $1.2 billion, as per data compiled by Trading Economics.

NIFTY50 top gainers and losers

IndiGo was top loser in the NIFTY50 index, the stock fell 6% to close at ₹4,533 after its flight operations for Middle East got suspended due to ongoing tensions in the region.

Larsen & Toubro dropped 5% on account of significant exposure the company has to the Middle Eastern countries.

Adani Ports, Maruti Suzuki, Asian Paints, Tata Motors PV, Bajaj Finserv and Shriram Finance also declined between 2.9% and 3.4%.

On the flip side, Bharat Electronics, Hindalco, Sun Pharma, ONGC, ITC, Cipla, Dr Reddy's Labs and JSW Steel were among notable gainers in the NIFTY50 index.

The overall market breadth was extremely negative as 2,579 shares ended lower while 651 closed higher on the NSE.