Why market is down today: Sensex tanks 700 pts, Nifty tests 24,000 on US-Iran news

Benchmark stock indices Sensex and Nifty snapped a two-session winning streak on Monday as Brent crude futures surged past the $79-a-barrel mark after the US and Iran continued to exchange missile strikes, escalating tensions in West Asia. As per reports, the US launched a new wave of strikes on Iran today, following an Iranian attack on a container ship in the Strait of Hormuz that set it ablaze and left a crew member missing over the weekend.

Tehran retaliated with further strikes on countries across the region, Times of Israel reported.

The attempt by Iran to weaponise geography has negative implications for energy importers like India, analysts said. The US President Donald Trump’s totally inconsistent stand vis-a-vis Iran has rendered stability a thing of the past, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments. 

"We don’t know how this crisis will pan out," Vijayakumar said.

Following the development, the BSE Sensex fell 608.91 points or 0.78 per cent to 76,960.48. At a low of 76,857.43, the index was down 712 points. Nifty declined 182.75 points or 0.75 per cent to 24,024.15.  Shrikant Chouhan, Head Equity Research at Kotak Securities said the 20-day SMA at 24,000 for Nifty and 77,000 for Sensex may act as the immediate support. 

"Holding above these levels would keep the short-term bias positive and could drive the indices towards 24,400-24,500 on the Nifty and 78,000-78,300 on the Sensex," he said.

InterGlobe Aviation Ltd (IndiGo) led the decline, falling 1.93 per cent to Rs 5,209.50. It was followed by Tata Steel, Maruti Suzuki India, HDFC Bank, Asia  Paints and SBI Life, which fell 1-2 per cent.

ICICI Securities said the ongoing retracement is a part of the prevailing uptrend which would make market healthy. "Any dip from hereon should be used as buying  opportunity as strong Nifty support is placed in the 23,600-23,400 zone, which we expect to hold. Further, any ease of in geopolitical tension would fuel the momentum towards 24,500 being placement of 200 days EMA," ICICI Securities said. 

Vijayakumar said as long as Brent trades below $90, the market won’t be impacted significantly. But if Brent shoots up to above $90, there can be a significant correction in the market. So, watch out for the price of crude, he said.

Meanwhile, analysts noted gold prices have retreated despite the geopolitical escalation, as a stronger US dollar and expectations of a higher-for-longer interest rate stance by the Federal Reserve outweighed safe-haven demand.

Investors are increasingly pricing in the possibility that prolonged geopolitical tensions and elevated energy prices could keep inflation risks higher for longer, reducing expectations of an early shift towards monetary policy easing, said Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth-tech firm.