Sensex, Nifty: 3 reasons why stock market is staring at selloff today

Benchmark stock indices Sensex and Nifty looked set to see another day of selloff as trading resumed on Wednesday following the Holi holiday. The closure of QatarEnergy LNG production and a halt at a Saudi Aramco refinery; disruptions to trade flows through the Strait of Hormuz, along with an overnight selloff on Wall Street, may all weigh in on domestic sentiment.  

Analysts said the immediate support for Nifty was placed at 24,600 but levels of 24,200–24,000 are possible if panic selling intensifies. At 8.16 am, Gift Nifty was trading 568 points, or 2.27 per cent, lower at 24,424.

"Markets are likely to remain under sustained selling pressure as global risk appetite deteriorates following the widening Israel–US–Iran conflict across the Middle East. Disruptions to trade flows through the Strait of Hormuz, driven by heightened security risks and rising insurance restrictions, have triggered a sharp surge in crude oil prices, amplifying inflation and supply concerns," said Ponmudi R, CEO of Enrich Money. 

Global rout 

Among Asian markets, South Korea’s KOSPI plunged 10 per cent today. Japan’s Nikkei 225 tumbled 3.82 per cent, while Hong Kong’s Hang Seng Index fell 2.3 per cent and China’s Shanghai Composite Index declined 0.99 per cent. Overnight, US indices including the Dow Jones Industrial Average and the S&P 500 ended up to 0.94 per cent lower.

The US President Donald Trump in a post on social media today said he has ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the financial security of all maritime trade.  "If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible," he said.

But Asian markets were still down as most of Asian energy supplies come from Strait of Hormuz. 

"If global sell-offs in the US and Europe persist, alongside commodity price spikes and continued FII selling, the index could test the crucial 24,000 support zone, where significant open interest is concentrated. Such a move may represent a liquidity sweep under high-volatility conditions. On the upside, 25,000 now stands as a strong psychological resistance level and will remain the key threshold to monitor for any meaningful revival in bullish momentum," said Hariprasad K, SEBI-registered Research Analyst and Founder at Livelong Wealth.

Brent crude oil prices for May delivery advanced 0.23 per cent and were trading at $82.13 a barrel on Wednesday. For India, one of the world’s largest oil importers, elevated energy prices pose a dual risk—widening the current account deficit and intensifying imported inflation pressures. The macro sensitivity to crude remains high, particularly at a time when external balances are closely watched. 

"The risks of a possible break above $100 a barrel threshold remain in place if there is a structural disruption to oil infrastructure," ICICI Bank said in a note.

Strait of Hormuz
ICICI Bank in in a note said given the US objective of regime change and Iran’s hard-lined stance so
far, the operation could continue with the impact on the markets and economy remaining contingent on
the duration of the conflict. The US President has already indicated that the conflict could rise for a period of four to five weeks. 

"Shipping companies have halted passing through the strait given that three ships were targeted by Iran over the weekend. Besides, insurance costs have increased by a considerable degree as well. However, if there is a continuation of the blockade that persists for a significant period of time possibly in excess of about a week or so, it could raise supply-side concerns that might push prices higher," he said.

Supply disruption
A report by Reuters citing four industry sources suggested that Indian oil companies have reduced natural gas supplies ​to industries in anticipation of tighter supply from the Middle ‌East after top producer Qatar halted production. The cuts range from 10 per cent to 30 per cent, two of the sources said.

As per a January note by Nomura, Petronet LNG has an existing LNG contract of 7.5 mpta with Qatar Energy. GAIL has an existing contract of 1mpta with the LNG supplier. GSPC, which is a parent of GSPL and Gujarat Gas  has also an existing contract of 1 mmtpa with Qatar Energy.