Indian stock markets opened sharply lower on Wednesday as fresh geopolitical tensions between the U.S. and Iran kept investors risk-averse, with BSE Sensex falling 816 points or 1.09% to 73,833 and NSE Nifty declining 200 points or 0.86% to 23,280 in early trade. According to Zee News, the benchmark indices opened significantly down amid ongoing Iran-US war uncertainties and continued foreign institutional investor selling. The market volatility index, India VIX, also saw a significant jump of 4% to 15.97 during morning trading hours, reflecting heightened investor anxiety over the escalating Middle East tensions.
IT stocks fell 1.8%, led by more than 2% decline each in Tata Consultancy Services (TCS) and Infosys as global software stocks dropped on profit-booking following a recent rally. As reported by The Hindu BusinessLine, the Nifty IT index had risen 7% in the last two sessions before the current decline. In contrast, Adani Ports rose 1% to lead gains. The broader market showed mixed performance with eleven of the 16 major sectors trading lower, while small-caps and mid-caps remained little changed. Around 1,634 stocks declined on NSE while 913 advanced and 84 remained unchanged.
Gulf hostilities flared anew as the U.S. military said Iranian missile attacks on Bahrain, Kuwait and other regional targets either were thwarted or unsuccessful, as diplomacy between Washington and Tehran showed little progress. According to The Hindu BusinessLine, this follows the previous reports of US forces defeating multiple Iranian ballistic missiles and drones amid attempted attacks across the Middle East. The US military shot down three Iranian one-way attack drones launched toward civilian mariners in regional waters, conducting self-defense strikes on an Iranian military ground control station on Qeshm Island. Iran's foreign ministry accused attacks made by the US on an empty Iranian tanker and on Qeshm Island were launched from Kuwait and Bahrain, with the rulers of both countries responsible for any action taken by the US from their soil. Kuwait rejected these allegations and expelled two Iranian diplomates as a mark of protest against the attacks.
Oil prices extended gains with Brent crude rising about 1% to $97 per barrel, following oil prices that gained more than 7% over the first two trading sessions of the week. As reported by The Hindu BusinessLine, the increasingly fragile ceasefire in the Middle East raised worries over the prolonged closure of the Strait of Hormuz, a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman that handles over 20% of the world's daily oil and gas shipments. The rupee fell 14 paise to 95.50 against the US dollar in early trade, with higher crude prices raising concerns over India's import bill and inflation outlook. The West Texas Intermediate (WTI) rebounded back to $96 a barrel following the latest flare-up in tensions.
Foreign investors remained net sellers of Indian equities, with net selling shares worth nearly ₹8,363 crore on Dalal Street on Tuesday. According to The Hindu BusinessLine, this followed a massive ₹22,102 crore selloff in just one session on May 29, and ₹3,843 crore on June 1. The sustained FPI outflow continues to be a strong headwind for the Indian markets despite retail investor confidence.
