The Indian stock market faced a significant downturn on Thursday, October 3, due to escalating tensions in the Middle East. Investors rapidly sold off assets, causing the benchmark indices SENSEX and NIFTY to each drop over 2%. The panic was fueled by a combination of geopolitical fears and economic indicators, leading to a flight towards safer investments like gold.
Details of the downturn
The BSE SENSEX closed the day down 1,769.19 points, or 2.10%, finishing at 82,497.10. It had dropped as low as 1,832.27 points during the day. Similarly, the NSE NIFTY fell by 546.80 points, or 2.12%, to end at 25,250.10. These figures mark a continuation of a four-day losing streak for the indices.
Major players and market movements
Heavyweights hit hard
Major contributors to the day's losses included industry giants such as Reliance Industries and HDFC Bank. Other significant laggards were Larsen & Toubro, Axis Bank, Asian Paints, Tata Motors, Bajaj Finance, Maruti, Bajaj Finserv, Kotak Mahindra Bank, Titan, Adani Ports, and HDFC Bank. JSW Steel stood out as the sole gainer amidst the general market decline.
Foreign investments and regulatory changes
Vinod Nair, Head of Research at Geojit Financial Services, pointed out that the downturn was sharply triggered by geopolitical events. "The domestic market took a sharp downturn following Iran’s launch of ballistic missiles at Israel, sparking fears of retaliation and an escalation in the conflict," Nair explained. He also noted the impact of new SEBI regulations on the Futures & Options (F&O) segment and shifting foreign investments towards more attractively valued markets like China.
Global market responses and economic indicators
Asian and global market reactions
While Asian markets saw mixed results, with Hong Kong settling lower and Tokyo closing higher, European markets mostly trended downwards. US markets, however, managed a slight increase on Wednesday. With mainland China's markets closed for the week due to a holiday, global investors are keeping a close watch on developments.
Oil prices and foreign outflows
The Brent crude oil price rose 1.37% to $74.91 a barrel. Concurrently, foreign institutional investors (FIIs) continued their recent withdrawal from Indian markets, with sales totalling ₹5,579.35 crores on Tuesday.
Market outlook
With the ongoing foreign fund outflows, rising oil prices, and the new regulatory environment, market analysts recommend cautious trading. Investors looking to buy shares online should stay informed about global events and market trends to make educated decisions. As the situation develops, it's crucial for anyone planning to buy shares online to monitor the markets closely and consider the broader geopolitical and economic landscape.
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