SENSEX drops over 800 points, NIFTY50 breaks below 25,000; here are key factors why markets are down

The Indian equity benchmarks nosedived on Monday, June 23, on the back of weak global markets after tensions in Middle East escalated. The 30-shares SENSEX fell as much as 840 points and NIFTY50 index broke below its important psychological level of 25,000 to hit an intraday low of 24,858. As of 9:40 am, the SENSEX was down 721 points or 0.9% at 81,690 and NIFTY50 index fell 218 points or 0.87% to 24,895.

Escalating tensions in Middle East

Equity markets across world fell while crude oil and gold prices surged as tensions in Middle East escalated after US joined Israeli attacks on Iran's nuclear facilities.

Japan's Nikkei fell 0.52%, China's Shanghai Composite declined 0.1%, Hong Kong's Hang Seng dropped 0.78% and South Korea's KOSPI tumbled 0.7%.

The United States struck three sites in Iran early Sunday, inserting itself into Israel’s war aimed at destroying the country’s nuclear program in a risky gambit to weaken a long time foe despite fears of a wider regional conflict.

Addressing the nation from the White House, President Donald Trump asserted that Iran’s key nuclear were “completely and fully obliterated.” There was no independent damage assessment.

It was not clear whether the US would continue attacking Iran alongside its ally Israel, which has been engaged in a nine-day war with Iran. Trump acted without congressional authorization, and he warned that there would be additional strikes if Tehran retaliated against US forces.

Crude prices surge

Crude oil price in international markets surged on fears that Iran may block Strait of Hormuz, a key oil trading route, in retaliation to US attack on Iran's nuclear facilities.

Global crude benchmark Brent jumped about 2.6% after surging as much as 5.7%. Investors were seen taking refuge in safe assets as gold prices also shot up. Gold edged higher as the world waited for Iran’s response after the US joined the Israeli assault on the Islamic Republic over the weekend, risking a wider war that could push up energy prices, according to a report by Bloomberg.

The precious metal climbed as much as 0.8%, before paring most of that gain, after the US struck Iran’s three main nuclear sites. That spurred a flight to havens like the dollar and gold on Monday, while oil prices jumped sharply on fears that Tehran could attack Middle Eastern energy infrastructure or threaten shipping in the Strait of Hormuz, the report added.

Broad-based selling pressure

Selling pressure was visible across board as all the major sector gauges compiled by the National Stock Exchange were trading lower led by NIFTY IT index's 1.68% fall. NIFTY Auto, Bank, Financial Services, Metal and Oil & Gas indices also fell between 0.5%-1% each.

Mid- and small-cap shares were facing a mild selling pressure as NIFTY Midcap 100 index declined 0.32% and NIFTY Smllcap 100 index fell 0.10%.

NIFTY50 gainers and losers

Infosys was top gainer in the NIFTY50 index, the stock fell 2.83% to ₹1,577 after the global IT giant Accenture said that new bookings decreased 6% to $19.7 billion in the third quarter.

Shriram Finance (-2.35%), JSW Steel (-1.82%), Tata Consultancy Services (1.80%), Hero MotoCorp (-1.69%) and Mahindra & Mahindra (-1.59%) were also among the losers.

On the flipside, Bharat Electronics, Nestle, Trent and ONGC were among the notable gainers in the NIFTY50 index.