The rupee sank to a new closing low and equities slumped on Monday as oil prices spiked past $100 a barrel again with Donald Trump rejecting the peace plan offered by Iran and PM Narendra Modi calling for austerity to conserve the country’s foreign exchange reserves and rein in fuel consumption amid little sign of the Gulf war ending soon.
Analysts said the Nifty is anticipated to remain in a narrow range with investors keeping a close watch on oil prices. However, the broader market is likely to be resilient, they said.
The Nifty 50 fell 1.5%, or 360.3 points, to close at 23,815.85, dropping below 24,000 levels for the first time since April 30, while Sensex slipped 1.7%, or 1,312.91 points to end at 76,015.28.
PM’s advice is anticipated to be a precursor to measures that may be taken to attract dollars, said Sunny Agrawal, head of fundamental research, SBI Securities.
“The US-Iran stalemate continued to weigh on the markets and PM Modi’s advice to restrain spending to conserve the forex and tackle pressure from rising oil prices led to panic selling today,” said Agrawal. The rupee, which has been closely tracking movements in oil prices, ended at 95.31 per dollar, weaker than the previous close of 94.48. Brent crude oil futures rose 3.1% to $104.4 on Monday after Trump rejected the new Iran peace offer. They had dropped 6.4% in the past week. The Indian currency opened at 94.88 and fell through the day. Levels above 95.20-95.25 prompted intervention by the Reserve Bank of India, traders said, with state-run banks spotted selling dollars. “Markets reacted cautiously to PM Modi’s remarks highlighting concerns over rising imports and the need to reduce dependence on imported commodities,” said Jateen Trivedi, currency research analyst, LKP Securities. “The speech has raised concerns about the pressure of a higher import bill on the economy and currency stability, especially with elevated crude prices continuing to strain the external balance.”
The increase in oil prices also spooked the 10-year benchmark government bond yield, which closed at 7.03% on Monday, five basis points higher than its previous close.
The global uncertainty due to the West Asia war has made investors hesitant about deploying lumpsum funds and the market is likely to remain range-bound in the near term with a bearish bias, said Sandeep Bagla, CEO, Trust Mutual Fund. “While Q4 earnings are largely in line, the higher oil prices are expected to eat into future earnings which could lead to valuations correcting,” he said. “Investors must temper return expectations in the short term.”
The India VIX volatility index jumped 10.2% to 18.6, suggesting that traders anticipate higher risk in the near term.
Technical analysts said that the gap down opening is expected to be a corrective pullback in an uptrend and not a trend reversal.
The Nifty downside is expected to be limited to 23,500-23,600 levels and positional traders can buy at these levels as the risk reward is likely to be favourable, said Ruchit Jain, head of technical research, Motilal Oswal Financial Services.
Analysts said the Nifty is anticipated to remain in a narrow range with investors keeping a close watch on oil prices. However, the broader market is likely to be resilient, they said.
The Nifty 50 fell 1.5%, or 360.3 points, to close at 23,815.85, dropping below 24,000 levels for the first time since April 30, while Sensex slipped 1.7%, or 1,312.91 points to end at 76,015.28.
PM’s advice is anticipated to be a precursor to measures that may be taken to attract dollars, said Sunny Agrawal, head of fundamental research, SBI Securities.
“The US-Iran stalemate continued to weigh on the markets and PM Modi’s advice to restrain spending to conserve the forex and tackle pressure from rising oil prices led to panic selling today,” said Agrawal. The rupee, which has been closely tracking movements in oil prices, ended at 95.31 per dollar, weaker than the previous close of 94.48. Brent crude oil futures rose 3.1% to $104.4 on Monday after Trump rejected the new Iran peace offer. They had dropped 6.4% in the past week. The Indian currency opened at 94.88 and fell through the day. Levels above 95.20-95.25 prompted intervention by the Reserve Bank of India, traders said, with state-run banks spotted selling dollars. “Markets reacted cautiously to PM Modi’s remarks highlighting concerns over rising imports and the need to reduce dependence on imported commodities,” said Jateen Trivedi, currency research analyst, LKP Securities. “The speech has raised concerns about the pressure of a higher import bill on the economy and currency stability, especially with elevated crude prices continuing to strain the external balance.”
The increase in oil prices also spooked the 10-year benchmark government bond yield, which closed at 7.03% on Monday, five basis points higher than its previous close.
The global uncertainty due to the West Asia war has made investors hesitant about deploying lumpsum funds and the market is likely to remain range-bound in the near term with a bearish bias, said Sandeep Bagla, CEO, Trust Mutual Fund. “While Q4 earnings are largely in line, the higher oil prices are expected to eat into future earnings which could lead to valuations correcting,” he said. “Investors must temper return expectations in the short term.”
The India VIX volatility index jumped 10.2% to 18.6, suggesting that traders anticipate higher risk in the near term.
Technical analysts said that the gap down opening is expected to be a corrective pullback in an uptrend and not a trend reversal.
The Nifty downside is expected to be limited to 23,500-23,600 levels and positional traders can buy at these levels as the risk reward is likely to be favourable, said Ruchit Jain, head of technical research, Motilal Oswal Financial Services.
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