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Indian Shares Fall as Middle East Tensions Spook Investors

The new logo of the Bombay Stock Exchange (BSE) building is seen in Mumbai, India, July 12, 2023. REUTERS/Francis Mascarenhas/File photo Purchase Licensing Rights
The new logo of the Bombay Stock Exchange (BSE) building is seen in Mumbai, India, July 12, 2023. REUTERS/Francis Mascarenhas/File photo Purchase Licensing Rights
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Indian Shares Fall as Middle East Tensions Spook Investors

The new logo of the Bombay Stock Exchange (BSE) building is seen in Mumbai, India, July 12, 2023. REUTERS/Francis Mascarenhas/File photo Purchase Licensing Rights
The new logo of the Bombay Stock Exchange (BSE) building is seen in Mumbai, India, July 12, 2023. REUTERS/Francis Mascarenhas/File photo Purchase Licensing Rights

Indian shares fell on Monday as investors sold riskier assets after Iran's retaliatory attack on Israel over the weekend spurred fears of a wider regional conflict.

The NSE Nifty 50 (.NSEI), opens new tab was down 0.73% at 22,354.70 as of 10:10 a.m. IST, while the S&P BSE Sensex (.BSESN), opens new tab fell 0.75% to 73,687.02.

"Risk sentiment took a hit after Iran's retaliatory attack on Israel over the weekend stoked fears of a wider conflict in the Middle East region and kept traders on edge," analysts at SMC Global Securities said in a note on Monday, Reuters reported.

"The worries in the Middle East have rattled all financial markets, pushing investors to look for safer places for their money."

Forty-one of the Nifty 50 stocks declined. All the 13 major sectors logged losses.

Shares of Indian rice and tea exporters fell amid escalations in Middle East tensions. India is one of the top exporters of basmati rice and tea, and Iran is a leading buyer of those commodities.

Other Asian peers also traded lower, with the MSCI Asia ex-Japan index (.MIAPJ0000PUS), opens new tab shedding 0.72%.

Among individual stocks, Tata Consultancy Services (TCS.NS), opens new tab, India's top software services firm by revenue, gained 0.8% and was among the top five Nifty 50 gainers.

"While the company reported lower-than-expected revenue in March quarter, we still expect TCS to lead peers on revenue growth in fiscal year 2024, aided by ramp-up of mega deals," analysts at Kotak Institutional Equities said.

Aluminium producer Hindalco Industries (HALC.NS), opens new tab gained 2.5% and was the top Nifty 50 gainer, after the US and UK imposed restrictions on the trading of new Russian commodities on the London Metals Exchange and on the Chicago Mercantile Exchange.

This (development) should be most positive for aluminium prices and shares of aluminium producers, Jefferies said.

The broader, more domestically-focussed small- (.NIFSMCP100), opens new tab and mid-caps (.NIFMDCP100), opens new tab lost about 3% and 2%, respectively, after outperforming the benchmarks in April, ahead of the session.

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Oil Dips as Economic Concerns, Supply and Demand Expectations Weigh

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
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Oil Dips as Economic Concerns, Supply and Demand Expectations Weigh

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo

Oil prices slipped on Thursday after surging in the previous session on a larger-than-expected draw in US gasoline stocks, as markets weighed macroeconomic concerns and demand versus supply expectations. Brent futures were down 30 cents to $70.65 a barrel at 1140 GMT, while US West Texas Intermediate crude futures fell 31 cents to $67.37 a barrel.

Both benchmarks rallied about 2% on Wednesday after US government data showed tighter-than-expected oil and fuel inventories.

US gasoline inventories fell by 5.7 million barrels, more than the 1.9 million-barrel draw expected by analysts, while distillate stocks also dropped more than anticipated, despite gains in crude stocks, Reuters reported.

"Declining US gasoline inventories raised expectations for a seasonal demand increase in spring, but concerns about the global economic impact of tariff wars weighed on the market," said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment.

"With strong and weak factors progressing simultaneously, it has become difficult for the market to lean decisively in one direction or the other," he added. US President Donald Trump threatened on Wednesday to escalate a global trade war with further tariffs on European Union goods, as major US trading partners said they would retaliate for trade barriers already erected by the US president.

Trump's focus on tariffs has rattled investors, consumers and business confidence, and raised US recession fears. With the US president's stated commitment to cheaper oil, Citi analysts said their outlook for Brent by the second half of 2025 is $60 a barrel.

Global oil supply could

exceed demand

by around 600,000 barrels per day this year, the International Energy Agency said on Thursday, revising down its 2025 demand growth forecast. Meanwhile, the Organization of the Petroleum Exporting Countries said on Wednesday that Kazakhstan led a sizeable jump in February crude output by the wider OPEC+, highlighting a challenge for the producer group in enforcing adherence to agreed output targets, even as it intends to unwind production cuts.

Worries about flagging jet fuel demand weighed further on markets, with JP Morgan analysts saying that US Transportation Security Administration data showed "passenger volumes for March have decreased by 5% year-over-year, following stagnant traffic in February".

However, recent firm global demand numbers limited overall market weakness.

"As of March 11, global oil demand averaged 102.2 million barrels per day, expanding 1.7 million barrels per day year-over-year and exceeding our projected increase for the month by 60,000 barrels per day," the JP Morgan analysts added.