D-Street Slides as US Enters Israel-Iran Conflict; Nifty Slips Below 25,000

The headline indices were trading in red on June 23, today, tracing global cues, after the US officially joined Israel in striking Iranian nuclear sites. The benchmark Nifty 50 and BSE Sensex indices were 0.7% down each at 24,945.80 points and 81,797.72 points, respectively, at 12:15 pm on June 23.

The indices opened below the 25,000-mark, whereas the BSE Sensex index started today’s session at a discount of 700 points from its previous close. Almost all the major sectoral indices on the NSE were in red today.

While investors were hopeful of a rebound in the D-Street after a strong rally on Friday, increasing tensions in West Asia has crushed all those hopes. The US launched a targeted attack on 3 Iranian nuclear sites, namely, Fordow, Natanz and Isfahan with Trump calling the strikes “a spectacular military success.”

Although the direct exchange of ballistic weapons between Israel and Iran had already triggered a major risk-off sentiment, market participants were expecting a near breather. However, with the US official entry in the conflict, the projections of only limited impact on the Indian stock market faces renewed pressure.

Both the US economy and global markets were not prepared for the sudden conflict, and especially of the US’ involvement and this could weigh heavily on overall investor sentiment across markets.

However, VK Vijayakumar, chief investment strategist at Geojit Investments, believes that the US bombing of Iran’s nuclear facilities would have only limited impact on the market. “The uncertain factor now is the timing and nature of the Iranian response,” he said. However, the market assessment is that there are limits to what Iran can do against US and Israel.

Another thing that could dampen the sentiment across the Street is increasing oil prices. Brent Crude oil has tested levels of $81 per barrel in early trade but failed to sustain those levels. Today, oil stocks will continue to remain in focus after reports suggested that Iran is planning to choke Strait of Hormuz, which controls 20% of the total daily oil consumption passes. On the other hand, the Union Minister Hardeep Singh Puri has assured that India has multiple sources to import oil we have enough supply in place.