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Indian equities have seen a sharp drop on Wednesday as the conflict in West Asia shows no signs of de-escalation even on the fifth day. The Nifty is down over 500 points in early trading resulting in investor wealth worth over ₹11 lakh crore being wiped out in just the first 10 minutes of the session. Here are the key triggers behind today's fall:
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Indian equities have seen a sharp drop on Wednesday as the conflict in West Asia shows no signs of de-escalation even on the fifth day. The Nifty is down over 500 points in early trading resulting in investor wealth worth over ₹11 lakh crore being wiped out in just the first 10 minutes of the session. Here are the key triggers behind today's fall:
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The most important one is the war in West Asia, possibly the only one as well. The war has resulted in oil prices surging, which is a negative for net importers like India. Brent crude is currently trading above the $82 per barrel mark.
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The bigger impact is on gas security with the biggest LNG producers stalling production in Qatar due to the ongoing war and as their infrastructure gets hit. The gas crisis has impacted stocks like Petronet LNG, MGL, both of which are down 7% each, along with names like Gujarat Gas, who has cut supply to its industrial customers.
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The war in West Asia, and the subsequent rise in oil prices has also impacted the currency. The rupee has made a record low of 92.17 against the US Dollar this morning, which has also had a bearing on the equity markets. Sources say that the RBI has sold the greenback in the forex market to support the currency.
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Stocks with exposure to the Middle East continue to see selling pressure. Larsen & Toubro, which has a significant exposure to the region is down 7% after a 4% drop on Monday, while names like VA Tech Wabag, AIA Engineering, KEC , are also trading with losses between 3% to 4% on Wednesday.
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Technical factors were also a major factor as to why the index sold off on Friday. The Nifty fall below the 200-Day Moving Average last week and has continued to grind lower since then. The index had recovered from intraday lows on Monday due to the weekly expiry adjustments.
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However, not all is gloom. There are pockets that are doing well today. Defence is one name. Zen Tech, Solar Industries, Paras Defence, are trading with gains of 4% to 8%. HAL shares are also trading with gains. IT is the only sectoral index that is trading with gains on Wednesday, while select Pharma names are also continuing to do well.
