Indian stock market opened in the red on Wednesday with Sensex and Nifty recording only marginal losses, as investors assessed the impact of US’ strikes on Iran on peace deal hopes, although broader markets continued to outperform benchmarks.
Sensex declined around 70 points to open near 75,940, while Nifty 50 fell over 33 points or 0.14% to begin the session at 23,880 on Wednesday. This came even as India VIX, which measures volatility in market, dropped more than 3% to 16.13 in the early morning trading hours.
HDFC Bank, Infosys, Axis Bank, Asian Paints, Kotak Mahindra Bank, HCL Tech and Reliance Industries shares were the top losers on Sensex, falling up to 1%. Bucking the trend, Sun Pharma shares rose more than 1% to lead gains, while ITC, Bharat Electronics (BEL), ICICI Bank and others followed.
Nifty Midcap 100 and Nifty Smallcap 100 indices recorded marginal gains. Nifty Metal index gained nearly 0.5% to lead gains, while Nifty Oil & Gas declined 0.2%. Around 1,433 stocks advanced on NSE, while 760 declined and 163 remained unchanged.
"With S&P 500, Nasdaq and Nikkei setting new records and KOSPI and Taiex getting bought on declines, the bull rally in these markets is showing no signs of losing steam. So long as this trend continues, the Indian market will remain on the back foot weighed down by FII selling,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
He added that the market appears to be ignoring the concentration risk associated with the ongoing AI trade. “We don’t know how long this will last and when India will turn attractive to FIIs again. This will certainly happen but the timing is unknown,” he said.
There are some positive developments from the Q4 results, according to the analyst. “Overall the results have turned out to be better-than-expected. Midcaps have outperformed largecaps. A significant trend is that profit growth has outpaced revenue growth. The sluggish revenue growth is indicative of the weak demand conditions in the economy. Fairly-valued financials have good prospects. Segments like pharmaceuticals with inelastic demand and good exports are showing great resilience since this segment will continue to do well even during tough times for the economy,” Vijayakumar said.
US-Iran tensions rise
US and Iran appear to be closing in on the much-awaited deal to end the war in the Middle East and open up the Strait of Hormuz, but tensions simmer as the US conducted strikes on Iran. Tehran on Tuesday said that the US had violated a ceasefire by striking targets near the contested Strait of Hormuz, potentially complicating efforts to bring the war to a close.
Iran's foreign ministry said US strikes in Iran's southern Hormozgan province, where Iranian media reported sounds of explosions early on Tuesday, represented a "gross violation" of the ceasefire in place for nearly seven weeks. The US said its attacks were defensive in nature, targeting missile sites and boats attempting to lay mines.
Israel meanwhile pounded Lebanon with more than 120 air strikes on Tuesday in one of the heaviest days of bombing in weeks, Lebanese security sources said. Iran has sought an end to Israeli attacks in Lebanon as part of any peace deal.
US Secretary of State Marco Rubio said it could take "a few days" to negotiate a deal to halt the conflict, after both sides had previously indicated progress on an initial agreement that would end hostilities and restart shipping through the Strait. That initial agreement would give negotiators 60 days to tackle more complex issues including Iran's nuclear program.
More to come...
