Indian stock markets fell nearly 2% as rising tensions in West Asia following Donald Trump’s remarks on Iran pushed crude oil prices above $105 per barrel. (AP Photo)
The Indian benchmark stock indices continued their topsy-turvy journey, falling 2% early on Thursday after gaining over 1% in the previous session as comments by US President Donald Trump again escalated fears of the war in West Asia intensifying. Crude oil prices were back above $105 per barrel.
Both the National Stock Exchange’s Nifty 50 index and the BSE’s Sensex index were down around 1.9% at around 9:50 AM. All sectoral indices of the NSE were deep in the red, with pharmaceuticals and healthcare losing over 3% and being the worst hit. These sectors, usually categorised as defensive and relatively stable during uncertainty, have fallen by around 8% since the war in West Asia began, compared with an 11-12% fall in the benchmark indices.
The Nifty VIX, which measures market volatility, rose 4% and remained at its highest levels since the COVID-19 period. As long as VIX levels stay elevated, any gains are usually to be one-off and unlikely to be sustained.
The fall on Thursday comes after Trump said the US is close to a conclusion of its objectives in West Asia and threatened to strike hard at Iran. “We are going to hit them extremely hard over the next two or three weeks. We will bring them back to the Stone Age,” Trump said in an address, dashing hopes of longer-term peace raised by earlier comments about ending military attacks on Iran within 2-3 weeks.
“By saying core strategic objectives are nearing completion in the Iran War, Trump signals near-term finality to the West Asian crisis. In next 2 to 3 weeks, either the escalation could increase substantially, including an attack on Iranian power and crude facilities, or some deal could be achieved. Uncertainty will prevail in the near term with crude oil prices remaining firm,” said Garima Kapoor, deputy head of research and economist at Elara Capital.
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Experts also remain unconvinced by Trump’s statements. “President Trump’s statement that ‘we will finish the job in two to three weeks’ cannot be taken at face value since the president has been notoriously inconsistent in all his views. He can change his position anytime,” according to VK Vijaykumar, chief investment strategist at Geojit Financial Services.
Post Trump’s speech, the futures of the US benchmark indices fell around 1%. Among Asian peers, the South Korean and the Japanese markets fell as much as 4% early in the day. The Chinese and the Hong Kong markets are also trading lower.
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