Mumbai— Indian equity markets ended the week in negative territory as escalating geopolitical tensions overshadowed early optimism from progress in U.S.–China trade talks, analysts said Saturday. A surprise Israeli strike on Iran’s nuclear facilities triggered a global risk-off sentiment, driving investors toward safe-haven assets and sparking a surge in defense sector stocks.
The unexpected escalation pushed gold and U.S. Treasury bonds higher, while crude oil prices jumped above $76 per barrel after months of relative stability, fueled by renewed fears of supply disruptions in the Middle East.
“Domestically, consumer price inflation (CPI) eased to a 75-month low, providing temporary relief. However, the uptick in crude oil prices could reverse that trend if the geopolitical conflict intensifies,” said Vinod Nair, Head of Research at Geojit Financial Services. “Rate-sensitive sectors like auto, realty, and banking faced profit booking, while IT and pharma stocks gained on the back of a weaker rupee.”
Volatility spiked across the board, with the India VIX index rising more than 7 percent, indicating growing investor nervousness. All major sectoral indices closed in the red, reflecting a broad-based sell-off.
The Nifty 50 opened sharply lower, hitting an intraday low of 24,473 before recovering slightly to close at 24,718.60, down 169.60 points or 0.68 percent. The Nifty PSU Bank index was the biggest laggard, dropping 1.18 percent, followed by declines of 1.17 percent in Nifty Bank and 0.96 percent in Nifty Metal.
Broader markets also came under pressure, with the Nifty Midcap 100 and Smallcap 100 indices falling 0.4 percent and 0.5 percent, respectively. In contrast, defense stocks outperformed sharply, as rising geopolitical risk raised expectations of increased defense spending and order inflows.
“Investors see rising global tensions as a catalyst for accelerated defense procurement, which supported sharp gains in related stocks,” Bajaj Broking Research noted in its commentary.
Given the heightened uncertainty, market experts advise a cautious and balanced strategy, emphasizing selective stock picking based on sectoral and thematic strength. “Avoid aggressive bets in the current environment and manage risk with a hedged approach,” said Ajit Mishra, SVP – Research, Religare Broking Ltd.
Looking ahead, investor focus is now shifting to the upcoming U.S. Federal Reserve meeting. While interest rates are expected to remain unchanged, markets will closely watch the Fed’s forward guidance and economic outlook for future policy direction. (Source: IANS)
