Stock markets drop in early trade on renewed geopolitical concerns

MUMBAI: Equity benchmark indices Sensex and Nifty declined in early trade on Tuesday amid fresh tensions in the Strait of Hormuz region.

The rupee falling to all-time low of 95.40 against US dollar in early trade also added to the weak trend in equities.

The 30-share BSE Sensex declined 361.62 points to 76,907.78 in early trade. The 50-share NSE Nifty dropped 134.90 points to 23,980.60.

From the 30-Sensex firms, Larsen & Toubro, Bajaj Finance, Bajaj Finserv, ICICI Bank, Sun Pharma and Maruti were among the major laggards.

Bharti Airtel, Reliance Industries, Titan and Bharat Electronics were among the winners. Brent crude, the global oil benchmark, traded around USD 113 per barrel mark.

"The market trend will be guided by the developments in West Asia particularly in the Strait of Hormuz. The resumption of hostilities in the Hormuz region and Brent crude again spiking to around USD 113 are headwinds for the market," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

In Asian markets, Hong Kong's Hang Seng index quoted lower.

US markets ended lower on Monday.

"US markets saw sharp selling pressure, with the Dow correcting significantly as crude oil surged on renewed geopolitical concerns around the Strait of Hormuz. Elevated oil prices, still holding above the USD 100 mark, continue to pose a macro risk for India, given its import dependence," Hariprasad K, Research Analyst and Founder, Livelong Wealth, said.

Foreign Institutional Investors (FIIs) turned buyers on Monday, buying equities worth Rs 2,835.62 crore, according to exchange data.

"Indian equity markets are likely to trade with a cautious bias, as renewed tensions between the US and Iranian forces weigh on investor sentiment," Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, said.

While the outcome of recent state assembly elections and fresh data indicating foreign portfolio investors have turned net buyers of domestic equities offer some measure of support, the broader mood remains one of restraint, he said.

"Geopolitical uncertainty and prevailing global risk aversion continue to dominate sentiment, limiting the scope for a sustained upside in the near term," Ponmudi added.

In a mandate as sweeping as it is symbolic, the BJP on Monday scripted history by winning 206 seats to secure more than a two-thirds majority in the West Bengal assembly polls, ending the TMC's 15-year rule, and decisively shifting the state's ideological and political centre of gravity.

On Monday, the Sensex climbed 355.90 points or 0.46 per cent to settle at 77,269.40. The Nifty rallied 121.75 points or 0.51 per cent to end at 24,119.30.