Plane Crash To Middle East Tension: Stock Market Nose Dives; Nifty Drops To 24,750, Sensex Down By 520 Pts

Air India's Ahmedabad to London plane crash, Iran closing its airspace, and tension in Middle East led to a major drop on Friday in Indian stock market. At the closing bell, share market recorded a significant downturn as the Sensex fell by 573 points and the Nifty dropped below 24,750.

All 13 sectoral indices ended in the red, with small-cap and mid-cap indices falling by 2% each.

Oil prices surged over 10% due to fears of supply disruptions following the Israeli strikes. This escalation led to a global sell-off, with investors seeking refuge in safe-haven assets like gold and the Swiss franc. The MSCI Asia ex-Japan index fell by 1.1%, while S&P 500 futures declined by 1.6% as of midday Tokyo time.

Impact on Indian Markets

In India, the rupee weakened significantly against the US dollar, dropping by 61 paise to reach 86.15. Gold futures soared past Rs 1 lakh per 10 grams, hitting a new all-time high. The India VIX spiked over 10%, reflecting increased market volatility amid geopolitical tensions.

Shares of oil marketing companies such as IOC and BPCL tumbled up to 6% as Brent crude prices crossed $75 per barrel. Reliance Industries also saw its shares slip by up to 1.8%. The surge in crude prices raised concerns about margins for oil-dependent sectors like aviation and paints.

Global Market Reactions

European stocks opened lower, with travel stocks like ICAG and Lufthansa dropping over 4%. The STOXX 600 was headed for its fifth consecutive loss for the week. In Asia, Japan's Topix fell by 1.2%, Australia's S&P/ASX 200 dropped by 0.3%, and Hong Kong's Hang Seng declined by 0.7%.

The escalating conflict between Israel and Iran has put Adani Group's investments in Israel under scrutiny. Shares of Adani Ports fell by 3.2%, while Adani Enterprises slipped by 2.8%. Concerns about regional risks have affected these stocks despite Haifa Port's strategic importance.

Sectoral Performance

The FMCG and PSU Bank sectors were among those hit hardest, with significant declines across their stocks. Meanwhile, defence stocks surged up to 8% as investors anticipated increased spending due to rising geopolitical tensions.

Aviation stocks like IndiGo and SpiceJet faced sharp declines following a fatal Air India crash and rising crude oil prices. IndiGo shares fell nearly 6%, while SpiceJet dropped by around 5.5% on the BSE.

Investor Sentiment

The broader market sentiment was risk-averse as investors moved towards safer assets amid global uncertainties. Bitcoin also saw a decline of about 3% due to the escalating Middle East conflict.

Despite these challenges, some companies managed to buck the trend; Manappuram Finance rose by 3%, reaching a fresh yearly high amid the broader market sell-off.

The Reserve Bank of India intervened in currency markets to stabilise the rupee after it initially fell sharply against the dollar due to rising oil prices triggered by geopolitical tensions.