Escalating Middle East tensions and weak earnings from Infosys and IndiGo added to selling pressure on Friday, extending a five-session losing streak
Indian stocks dropped sharply on Friday in frenzied trading after crude oil prices crossed the $100 mark a barrel due to the Middle East conflict, besides falling sharply on disappointing gross profits by IT major Infosys and IndiGo.
The Nifty 50 lost ground by 0.95 per cent to 23,642.45 while the BSE Sensex declined 1.03 per cent to 75,609.4 by mid-day, as both the indices posted their fifth straight day of selling. The Nifty and the Sensex were down close to 2.8 per cent and 3.2 per cent respectively for the week, poised to clock their worst weekly fall in over four months.
Middle East Conflict Widens
The Middle East conflict escalated as President Donald Trump warned of “major military punishment” against Iran and its allies in Yemen, Houthi, after the rebels attacked two Saudi oil tankers in Red Sea. “Middle East tensions have flared up again, with the regional violence spilling over into the global markets. The situation was further strained this week with a jump in crude oil prices on account of rising security concerns, which affected market sentiments,” said Sunny Agrawal, head fundamental research, SBI Securities.
Why Oil Prices Matter for India
Importers and consumers of crude oil will be adversely affected by higher prices, which could trigger inflation, impairing economic growth as well as the earnings of corporates. India is the third-largest importer and consumer of crude oil in the world.
Broad-Based Losses
Fifteen of 16 major sectors ended lower, with small-cap and mid-cap indices falling 1.3% and 1% respectively. Infosys slipped about 1%, while IndiGo parent InterGlobe Aviation dropped 2.2% following weaker-than-expected June quarter results. Oil marketing companies BPCL, HPCL, and Indian Oil each fell around 2% on the crude price surge, while Ramco Systems tumbled 10% after reporting a quarterly profit decline.
Bright Spots
A handful of stocks bucked the trend. Cyient and Suryoday Small Finance Bank rose 2% and 7% respectively after posting stronger June quarter profits.
