Stock market selloff: Why Sensex, Nifty are falling after US entry into Iran-Israel conflict

Higher crude oil prices on Monday weighed heavy on stock market indices -- Sensex and Nifty, as US strikes on Iran raised fears that the latter may block shipping access in Strait of Hormuz, where crude oil imports from Iraq, Saudi Arabia, Kuwait and the UAE pass-through and account for 45 50 per cent of total crude imports by India. About 60 per cent of the natural gas imports by India pass through the Strait of Hormuz, stock analysts noted.82,408.17

The BSE Sensex fell 704.10 points, or 0.85 per cent, to open at 81,704.07. The NSE Nifty declined 172.65 points or 0.69 per cent at 24,939.75. Fear gauge India VIX, which suggests the likely volatility in the market over the next 30 days, jumped 3.96 per cent to 14.08.

Except for Bharat Electronics Ltd and Bhati Airtel, all Sensex stocks were down. Infosys, HCL Technologies and Eternal led the decline, falling up to 2 per cent.

"Oil prices jumped on Monday to their highest since January as Washington’s weekend move to join Israel in attacking Iran’s nuclear facilities stoked supply worries. Iran is considering closing the key oil shipping route, the Strait of Hormuz, after the US bombed three of its nuclear facilities. The Strait of Hormuz is one of the world's most critical chokepoints, through which a fifth of the global oil and gas supply flow," said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Vakil said one cannot discount the possibility of unpredictable contagion effects across global markets if hostilities continue to escalate.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd said the biggest concern for Indian stock market is the Iranian parliament recommending the Strait of Hormuz closure. Also, if the war prolongs WTI oil prices could spike towards $100 a barrel and inflation risk in India will be back on the front pages as fuel prices move up drastically, Tapse warned.

Indices across Australia, Japan, Korea, mainland China, Hong Kong and Korea fell up to 0.90 per cent.

Gold, silver prices
Gold and silver prices hovered near $3,360 and $36 per ounce, respectively.

"Gold has support at $3335-3315 while resistance is at $3380-3400. Silver has support at $35.75-35.50 while resistance is at $36.35-36.55. In rupee terms, gold has support at Rs 98,650-98,350 while resistance is at Rs99,550-99,840. Silver has support at R s105,550-104,700 while resistance is at Rs1,07,150-1,08,000," Rahul Kalantri, VP Commodities, Mehta Equities Ltd.