Feeling the Heat: How Iran-Israel Tensions Are Affecting the Indian Market | Weekly Update April 20th
Hello Readers!
We trust you’ve had a good week so far, though we can’t ignore the escalating tensions between Iran and Israel, which are impacting not just people, but also the markets. Let’s take a closer look at how the markets have fared this week and discuss the implications of the Iran-Israel tensions on the Indian market.
🧾In this Article
Weekly Market Wrap-up
Quick bites
Stocks in News
Sustainability Corner
Cover story: Feeling the Heat: How Iran-Israel Tensions Are Affecting the Indian Market
Key events
📈 Weekly Market Wrap-up
This week, the Indian stock market experienced a correction, with both the SENSEX and NIFTY dipping into negative territory. The SENSEX closed at 73,088.33, a decrease of 1.56% or 1156.57 points compared to last week. Similarly, the NIFTY ended the week at 22,147, down 1.65% or 372.4 points.
Winners and Losers:
Despite the overall downturn, a few stocks managed to buck the trend and deliver impressive gains. Bharti Airtel led the pack, surging 5.23% to close at ₹1296.45. ONGC followed closely with a 3.76% increase, reaching ₹280.8. Maruti Suzuki also put in a strong performance, climbing 3.22% to ₹12752.05. Rounding out the top winners are Hindalco Industries (up 2.84%) and Power Grid Corporation (up 2.36%)
Top Losers:
Unfortunately, several stocks took a hit this week. Adani Enterprises fell the furthest, dropping 5.7% to close at ₹3056.25. Tata Motors also experienced a significant decline, slipping 5.42% to ₹967.9. Hero MotoCorp, Infosys, and LTI Mindtree followed suit, with losses ranging from 4.7% to 5.18%.
Sector Spotlight:
The IT sector took the biggest hit this week, with the BSE IT index plummeting a hefty 4.59%. The FMCG and Consumer Goods sector also saw a decline, albeit less severe, at 1.16%. Capital Goods, Healthcare, and Consumer Durables also experienced minor losses, ranging from 1.22% to 2.38%.
Market Breadth:
It’s interesting to note that the broader markets outperformed the benchmark indices. The S&P BSE Midcap ended the week down a smaller 0.39%, and the S&P BSE Smallcap settled even lower at just 0.04%.
Looking deeper, on the BSE, 11 sectors declined while nine advanced out of the total 20. The S&P BSE Realty index was the worst performer, while the S&P BSE Bankex emerged as the top performing sector. Market breadth, however, was skewed towards sellers. Around 2,063 stocks declined on the BSE, compared to only 1,725 stocks that advanced, with 115 remaining unchanged.
Rupee Report:
Despite global jitters caused by Middle Eastern tensions, the Indian Rupee managed to end the week stronger against the US Dollar. After initial losses, the Rupee clawed its way back, ultimately settling 4 paise higher at ₹83.48 on Friday. This resilience can be partly attributed to a strong rebound in domestic equities. However, the Rupee’s early decline highlights the currency’s vulnerability to global risk aversion.
Gold Surges:
Gold prices experienced sharp swings this week, briefly touching record highs before retreating. Concerns about a wider Middle East conflict sparked by Israel’s strikes on Iran initially sent gold prices soaring. Spot bullion jumped as much as 1.6% following the news, reflecting an increase in safe-haven buying. This mirrored a similar rise in base metals, although those gains later moderated. The overall gold rally, which has seen record-breaking prices since mid-February, continues to be driven by several factors. Expectations of US interest rate cuts, consistent central bank purchases, and strong consumer demand, particularly in China, all contribute to the bullish sentiment. Geopolitical tensions have further fueled the precious metal’s appeal, with gold briefly surpassing the $2,400 mark earlier this week.
Global Gossip:
Global markets displayed a mixed performance this week, with heightened tensions following the Israel-Iran strike causing jitters in some regions.
Despite the overall anxiety, US markets ended the week on a surprisingly positive note. The Dow Jones Industrial Average defied expectations, closing up 0.56% at 37,986.40. The S&P 500 also rallied, gaining 0.88% to reach 4,967.23, while the tech-heavy Nasdaq outperformed both, surging 2.05% to end at 15,282.01. This positive performance came despite the S&P 500 being on track for its worst week in nearly two years, currently down 6% from its record highs.
European markets generally showed resilience compared to Asia. The German DAX rose 0.56% to 17,737.36, while the French CAC 40 gained a modest 0.33% to 8,022.41. However, the FTSE 100 in the UK was the outlier, falling 10.24% to close at 7,895.85. The Spanish IBEX 35 saw minimal movement, inching up just 0.011% to 10,729.50.
Asian markets were the weakest performers this week. Japan’s Nikkei 225 tumbled 2.66%, weighed down by chip stock weakness, raising concerns about a potential technical correction. Adding to the regional woes, Taiwan’s main stock exchange suffered a significant drop of 5% due to geopolitical tensions.
Bottom Line
It was a week of cautious trading in the Indian markets. While some sectors and stocks managed to buck the trend, the overall sentiment leaned towards correction. Keep a close eye on economic data releases and global market trends in the coming week to gauge potential shifts in market direction. Remember, this is just a snapshot of the market’s performance, and conducting your own research is crucial before making any investment decisions.
🍟 Quick Bites
- 📈 NSE to launch Nifty Next 50 derivatives (F&O) from 24 April 2024.
- 🏍 Honda Motorcycles inaugurates ₹60 engine capacity factory at Manesar, Haryana.
- 🏭 Volvo Group’s SDLG opens first Indian factory in Bangalore.
- 🛢India imports around 87.7% of oil needs in FY 2024, with domestic crude production at 2.94 crore tonnes in 2023-24.
- 🍏 Apple and CleanMax form joint venture for 6 rooftop solar projects to power India operations.
- 🎉 Wow! Momo raises ₹70 cr from Z3Partners in latest funding round.
- 🌶 Catch Spices surpasses ₹1,000 cr in sales, per DS Group.
- 💰 India’s domestic mutual funds’ AUM rises by ₹14 lakh cr in FY 2024, reaching ₹53.40 lakh cr.
- 🛠 India’s engineering exports increase by 2.13% to ₹80,700 crore in FY 2024.
- 🚗 Automobile exports decline by 5.5% in FY 2024 due to lower demand abroad, notes SIAM.
- 📉 India’s trade deficit shrinks to ₹156 crore in March from ₹187 crore in February, driven by rising exports and falling imports.
- 💹 India’s wholesale inflation reaches 0.53% in March, up from 0.20% in Feb.
📰 Stocks in News
- 📈 Infosys declares final dividend of ₹20 per share and special dividend of ₹8 per share, with record date on 31 May 2024.
- 🏍 Bajaj Auto announces dividend of ₹80 per share; net profit rises by 35.11% YoY in Jan-March quarter.
- 💰 Muthoot Finance to raise ₹16,500 cr through external commercial borrowings for business expansion.
- 🏦 HDFC Life reports 14% net profit growth (₹412 cr) for Jan-March quarter.
- 📱 Airtel to merge Sri Lanka operations with Dialog Axiata, a Sri Lanka-based telecom company.
- 🌐 Tata Communications reports net profit of ₹321.20 cr for Jan-March quarter.
- 💊 Biocon partners with Brazil-based Biomm SA to commercialize its diabetes drug in Latin America.
- 🚗 Ramkrishna Forgings signs deal with USA’s largest electric passenger vehicle maker for power train component supply.
- 💡 Power Grid approves fundraise of ₹12,000 cr via bonds in FY 2025.
- 🏗 Ambuja Cements: Adani family’s shareholding in the company now at 70.3%.
- 🚗 Maruti Suzuki receives tax notice of ₹2.5 cr from Customs, Excise and Service Tax Appellate Tribunal, Chandigarh.
- 💼 KIMS subsidiary receives income tax notice of ₹306.97 cr.
- 📶 Vodafone-Idea (Vi) raises ₹5,400 cr from anchor investors.
- 📶 Airtel crosses 5.9 million 5G customers in Tamil Nadu.
- 💰 Jio Financial signs joint venture with BlackRock to launch wealth management & broking business.
- 💼 Cipla to acquire Ivia Beaute’s cosmetics and personal care business for ₹130 cr.
- 💰 Sterlite Tech raises ₹1,000 cr funding via QIP (Qualified Institutional Placement).
- ⛏ Coal India reports 6.5% increase in FY 2024 capex (₹19,840 cr), highest-ever for the company.
- 📊 Crisil records ₹138 cr net profit, 5.5% YoY decrease; declares ₹7 dividend.
- 🏗 Ambuja Cements signs ₹413.75 cr deal to acquire grinding plant in Tuticorin, Tamil Nadu.
- 💼 Aster DM announces special dividend of ₹118 per share with record date on 23 April.
- 💊 Sun Pharma’s Mumbai factory placed under ‘official action indicated’ category by US FDA for regulatory issues.
- 🏢 Brigade Enterprises to develop ₹400 cr office project in Chennai.
- 🚂 Ramkrishna Forgings secures ₹270 cr order to manufacture bogie frames for Vande Bharat trains.
🌱 Sustainability Corner
- 🌱 Adani Green records 35% YoY increase in operational capacity in FY 2023-24.
Feeling the Heat: How Iran-Israel Tensions Are Affecting the Indian Market
The past few weeks have seen a dramatic escalation of tensions between Iran and Israel. These developments have sent ripples across global markets, and the Indian market is no exception. Let’s delve into how these geopolitical jitters are impacting Indian investors and what we can expect in the coming days.
Oil Prices Take Center Stage:
India, a net importer of over 80% of its crude oil needs, is particularly vulnerable to fluctuations in global oil prices. Any disruption in supply from the Middle East, a key oil-producing region, can significantly affect domestic fuel prices and inflation. Recent attacks on Iranian nuclear facilities and the potential for a wider conflict have pushed Brent crude oil prices above $110 per barrel, a level not seen since 2014. This increase directly translates to higher import costs for India, potentially leading to a rise in petrol and diesel prices at the pump.
Impact on Specific Sectors:
The potential for a full-blown conflict in the Middle East also casts a shadow on specific sectors within the Indian market. Here’s a breakdown:
- Energy: Oil & Gas companies like ONGC and Reliance Industries might see a short-term boost in their stock prices due to the rise in crude oil prices. However, a prolonged conflict could disrupt supply chains and lead to volatility in the long run.
- Aviation: Airlines like IndiGo and SpiceJet could face the brunt of rising fuel costs, impacting their profitability and potentially forcing them to hike passenger fares.
- Consumer Goods: FMCG companies like Hindustan Unilever and ITC might face pressure due to rising input costs. This could lead to price hikes for everyday essentials, impacting consumer spending power.
- Defense: Companies involved in the Indian defense sector might see increased demand for their products if tensions escalate further. However, this is a long-term scenario, and the immediate impact remains unclear.
Market Volatility and Investor Sentiment:
The uncertainty surrounding the Iran-Israel situation has led to increased volatility in the Indian stock market. Investors tend to become risk-averse during such times, leading to a flight to safer havens like gold and bonds. This can cause a sell-off in riskier assets like equities, pushing down stock prices.
The Silver Lining: Opportunities Amidst Uncertainty
While the situation is undoubtedly concerning, there are potential silver linings for Indian investors:
- Diversification: Investors with a diversified portfolio across various sectors can mitigate some of the risks associated with geopolitical tensions.
- Long-Term Focus: Historically, geopolitical tensions have often had a temporary impact on the market. Focusing on the long-term fundamentals of the Indian economy can help investors stay calm and avoid panic selling.
- Potential Bargains: A temporary dip in the market could present an opportunity for savvy investors to buy quality stocks at a discount.
Looking Ahead:
The coming weeks will be crucial in determining the long-term impact of the Iran-Israel tensions on the Indian market. Closely monitoring news developments, oil prices, and investor sentiment is essential for navigating this period of uncertainty. By staying informed and maintaining a disciplined investment strategy, Indian investors can weather this storm and emerge stronger on the other side.
Upcoming key financial events for the week:
Date | Event |
20-Apr-24 | USD Treasury Currency Report |
23-Apr-24 | EUR French Flash Manufacturing PMI |
EUR French Flash Services PMI | |
EUR German Flash Manufacturing PMI | |
EUR German Flash Services PMI | |
GBP Flash Manufacturing PMI | |
GBP Flash Services PMI | |
USD Flash Manufacturing PMI | |
USD Flash Services PMI | |
25-Apr-24 | USD Advance GDP q/q |
USD Unemployment Claims | |
USD Pending Home Sales m/m | |
26-Apr-24 | USD Core PCE Price Index m/m |
USD Revised UoM Consumer Sentiment |