India’s benchmark indices took a sharp hit on Thursday, extending their losses for a fourth consecutive session as investor sentiment was dampened by escalating tensions between Israel and Iran, which threaten to engulf the Middle East in a broader conflict.
The Sensex dropped 1,769.19 points, or 2.10 percent, closing at 82,497, while the Nifty fell by 546.80 points, or 2.12 percent, ending at 25,250.10. All sectoral indices posted losses, with realty, oil and gas, banking, auto, and media sectors being the hardest hit.
“The domestic market took a sharp downturn following Iran’s launch of ballistic missiles at Israel, sparking fears of retaliation and escalation in war. This could potentially drive-up oil prices and lead to inflationary pressures,” said Vinod Nair, Head of Research at Geojit Financial Services.
Nair said that new SEBI regulations for the futures and options (F&O) segment have raised concerns about reduced trading volumes, adding to the negative market sentiment. “Lastly, with attractive valuations in China, FIIs have redirected their funds, adding pressure on Indian stocks,” he added.
In an effort to protect retail investors in the F&O segment, the Securities and Exchange Board of India (SEBI) introduced six new measures on Tuesday, including raising the minimum contract size for derivatives. These regulations will be implemented in phases starting from November 20.
Financial expert Ajay Bagga said that FIIs pulling out of Indian stocks in favor of China, along with geopolitical risks and tightening F&O trading rules, have led to the recent decline in Indian markets.
(With ANI input)