Key Takeaways
- Indian shares fell to their lowest levels in six weeks.
- IT stocks and rising oil prices were key factors in the decline.
- Market instability is expected to continue due to geopolitical tensions.
Indian shares slipped to their lowest levels in six weeks on Monday, pressured by IT stocks, as escalating tensions in the Middle East and rising expectations of a U.S. rate hike dented risk sentiment.
The Nifty 50 ended 0.5% lower at 23,779.15 and the BSE Sensex shed 0.5% to 76,132.81, reflecting a broader market downturn.
Market instability with a downward bias will continue in the short term due to periodic conflicts and higher crude oil prices, according to G Chokkalingam, founder and head of research at Equinomics Research.
Weaker rainfall and liquidity pressures from a rush of initial public offerings (IPOs) could also weigh on markets despite supportive domestic macroeconomic conditions, he added.
Fourteen of the 16 major sectors logged losses on Monday, with the IT sub-index falling 2.3% tracking broader weakness after stronger-than-expected U.S. jobs data reinforced expectations of a September Federal Reserve rate hike.
Higher U.S. rates could curb client spending and weigh on Indian IT firms that generate a significant share of their revenue from the United States.
Brent crude futures rose 0.6% to $96.8 a barrel after U.S. and Iran struck vessels sailing in the Strait of Hormuz and other areas, escalating Mideast tensions and intensifying inflation fears.
Broader small-caps were flat, while mid-caps fell 0.5%, indicating a mixed performance across different market segments.
Among individual stocks, PVR Inox slid 6.1% on reports that an internal investigation flagged alleged 2 billion rupee kickbacks by an executive linked to cinema property projects. The company said preliminary examination did not indicate any evidence of kickbacks.
Shares of Zee Entertainment fell 6.4% after media reports said India’s premier investigating agency filed an FIR against founder and Chairman Emeritus Subhash Chandra and some other individuals for allegedly defrauding LIC Housing Finance. Chandra’s office did not immediately respond to a request for clarification.
