Markets halt 5-day rally on ceasefire uncertainty; Sensex tumbles over 900 pts amid global weakness

MUMBAI: Equity benchmark indices Sensex and Nifty buckled under heavy selling pressure to close with deep cuts on Thursday after investors pared exposure to financial, banking, and IT stocks as renewed tensions in West Asia faded the ceasefire-led optimism.

Weak trends in Asian and European markets, a jump in crude oil prices and uninterrupted foreign fund outflows also made investors jittery in the domestic market.

Snapping its five-session winning run, the 30-share BSE Sensex dropped 931.25 points or 1.20 per cent to settle at 76,631.65. During the day, it dived 1,215 points or 1.56 per cent to 76,347.90.

The 50-share NSE Nifty declined 222.25 points or 0.93 per cent to end at 23,775.10.

The ceasefire deal appeared to be at risk after Iran closed the Strait of Hormuz again in response to Israeli attacks on Lebanon.

"After Wednesday's relief rally following the ceasefire announcement, domestic markets ended the volatile session in the red, driven by ceasefire uncertainty. Markets followed global cues as most of the markets ended in red due to crude oil gains and global uncertainty.

"Focus now will be on domestic company earnings, and sectors getting impacted due to surging crude prices. Investors will wait for more clarity on whether the ceasefire will translate into meaningful discussion and help end the war before taking any major equity exposure," Ankur Punj, MD & Business Head at Equirus Wealth, said.

From the 30-Sensex firms, InterGlobe Aviation, Larsen & Toubro, Eternal, HDFC Bank, ICICI Bank and Kotak Mahindra Bank were among the major laggards.

On the other hand, Bharat Electronics, Power Grid, NTPC and Tata Consultancy Services were among the gainers.

The BSE SmallCap Select index climbed 0.26 per cent, and the MidCap Select index went up by 0.15 per cent.

Among sectoral indices, BSE Top 10 Banks tumbled 1.86 per cent, Private Banks index (1.75 per cent), Bankex (1.58 per cent), Financial Services (1.41 per cent), PSU Bank (1.21 per cent), Services (1.04 per cent) and MidSmall Private Banks Quality Tilt (0.88 per cent).

However, Capital Goods jumped 1.64 per cent, Metal (1.30 per cent), Power (1.27 per cent), Hospitals (0.75 per cent), Healthcare (0.74 per cent), Utilities (0.69 per cent), Telecommunication (0.42 per cent).

Brent crude, the global oil benchmark, jumped 3.27 per cent to USD 97.85 per barrel.

In Asian markets, South Korea's benchmark Kospi, Japan's Nikkei 225 index, Shanghai's SSE Composite index and Hong Kong's Hang Seng index ended lower after a sharp rally in the previous trade.

European markets were quoting in the negative territory in mid-session deals.

"Ceasefire-led optimism faded as renewed US–Iran tensions and ongoing restrictions at the Strait of Hormuz pushed crude back up, reviving concerns around India’s inflation.

"Domestically, profit-booking, rising 10-year bond yields, and rupee weakness reduced near-term risk appetite. Financials led the decline after the previous session's sharp rally amid sustained FII selling, while broader markets held relatively steady," Vinod Nair, Head of Research, Geojit Investments Limited, said.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,811.97 crore on Wednesday, according to exchange data. Domestic Institutional Investors (DIIs), however, bought stocks worth Rs 4,168.17 crore.

US markets ended significantly higher on Wednesday. The Dow Jones Industrial Average jumped 2.85 per cent, the Nasdaq Composite surged 2.80 per cent, and the S&P 500 climbed 2.51 per cent.

"Indian markets witnessed a pullback, snapping the recent five-session gaining streak as sentiment turned cautious amid fading confidence around the US–Iran ceasefire. After a sharp rally in the previous session, today’s decline appears largely driven by profit-booking, with participants choosing to lock in gains rather than carry fresh risk in an uncertain environment," Hariprasad K, Research Analyst and Founder, Livelong Wealth, said.

On Wednesday, the Sensex jumped 2,946.32 points or 3.95 per cent to settle at 77,562.90. The Nifty soared 873.70 points or 3.78 per cent to end at 23,997.35.