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Nifty 50 and Sensex both fall nearly 1% as tensions in Middle East rise; Nifty IT index declines by 1.74%

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Nifty 50, Sensex drop nearly 1% amid escalating tensions in Middle East; Nifty IT index fell 1.74%

Amidst escalating tensions in the Middle East, the Indian stock market took a hit with the Nifty 50 and Sensex plummeting nearly 1%. The conflict between Israel and Iran has contributed to a downturn in global markets, with Asian indices experiencing significant losses at the opening of Friday’s trading session. The Nifty IT index also slumped by 1.74% due to weak earnings posted by Infosys.

Following reports of explosions near an airport in Isfahan, not Tehran, Asian markets witnessed a decline, with Japan’s Nikkei 225, South Korea’s Kospi index, Hong Kong’s Hang Seng index, and mainland China’s CSI 300 index all falling. In India, the Nifty 50 dropped by 0.99% while the Sensex plummeted by 0.92%, reflecting the overall bearish sentiment in the market.

The downward trend was further exacerbated by New York Fed President John Williams’ remarks indicating a diminishing likelihood of a near-term rate cut by the U.S. Fed. Williams emphasized that any decision to adjust interest rates in the future would be contingent upon economic conditions, causing uncertainty among investors.

Amidst the turmoil, oil prices surged with Brent crude futures trading up by 2.77% and WTI futures also experiencing gains. Analysts have warned that if tensions continue to escalate, crude oil prices could reach $100 per barrel. Additionally, bond yields strengthened, with the U.S. 2-year Treasury yield rising and the 10-year Treasury yield experiencing a rally after robust economic data from the Philadelphia Federal Reserve’s manufacturing survey.

In the face of geopolitical uncertainty, investors turned to safe-haven assets like gold, which rallied 0.9% on Thursday. Despite positive economic indicators from the U.S., the prospect of delayed interest rate cuts and hawkish comments from the Federal Reserve have left investors cautious about the market outlook.

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