MUMBAI: Fresh tensions between the US and Iran affected global investor sentiment on Monday, pushing up crude oil prices, weakening the rupee to a level below the 95-to-the-dollar mark, and leading to a sell-off on Dalal Street. As a result, sensex lost over 1,000 points in early trade, recovered some ground by mid-session, but fresh selling forced it to close 1,313 points (1.7%) down at 76,015 points.Foreign funds, which had already taken out over Rs 2 lakh crore from the Indian stock market on a net basis till May 8 this year, led Monday’s sell-off, BSE data showed. Foreign portfolio investors (FPIs) net sold stocks worth another Rs 8,438 crore during the day. In contrast, domestic funds were net buyers at Rs 5,940 crore.According to Vinod Nair of Geojit Investments, markets slid sharply as renewed tensions in the Persian Gulf region, following President Donad Trump’s rejection of Iran’s peace proposal, weighed on investor sentiment. “The cautious mood deepened after the PM’s appeal to conserve energy and avoid non-essential foreign travel, prompting investors to reassess the economic impact of higher crude prices, (rupee) weakness, and pressure on the current account deficit.”
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Nair said that at present, India’s strong fiscal position and healthy forex reserves are helping the govt to absorb the impact of elevated crude prices. However, prolonged geopolitical tensions could increase macroeconomic stress. Meanwhile, rising bond yields and persistent foreign fund outflow are likely to keep markets range-bound in the near term.The day’s session left investors poorer by a little over Rs 6 lakh crore with BSE’s market capitalisation now at Rs 467.3 lakh crore, official data showed.Among the sensex stocks, Reliance Industries, HDFC Bank and Bharti Airtel contributed the most to the day’s fall in sensex.Going forward, a combination of global and domestic factors which investors would keep a watch on include crude oil prices, weakness of the rupee, FPI trading trend, and the upcoming meeting between presidents of the US and China, market analysts said.