Sensex tanks 500 pts, Nifty tests 19,500 amid Israel-Hamas war; Tata Steel top loser; TCS, Infosys gain

Domestic stock indices took a beating on Monday morning, as Iran-backed Hamas fired over 5,000 rockets on Israel, killing over 1,000 and intensifying tensions in the Middle East. A total of 1,774 of 2,564 stocks that traded in early trade fell, with the BSE market capitalisation shaving Rs 3.5 lakh crore off investor wealth.

At 9.22 am, the BSE Sensex was trading at 65,460.39, down 535.24 points or 0.81 per cent. Nifty hit a low of 19,497.15 and was down 156 points or 0.8 per cent. The BSE m-cap slipped to Rs 3,16,34,324 crore against Friday's Rs 3,19,86,272 crore. A total of 91 stocks hit their lower circuit limits.

Smallcap and midcap indices tumbled falling 1 per cent each. Among sectors, capital goods, power and metals took the biggest hit. Fear gauge India VIX soared 9.73 per cent to 11.31 level.

Analysts said the Israel-Hamas war may lead to short-term bounce in crude oil prices, which were otherwise on a downtrend recently. This may weigh on sentiment globally and could weaken rupee against dollar and lead to foreign outflows.

Manoranjan Sharma, Chief Economist, Infomerics Ratings said the surprise Israel-Palestine war would have wide-ranging ramifications and repercussions across geographies, economies and sectors.

"There will be volatility in the bond and equity market temporarily. Bond yields will harden, cost of credit may go up for companies, crude price will rise if it spills over to middle East. Gold may become a safe haven. Bond yields will go down -- as interest rates will rise further, oil prices will go further up. This would impact the Indian capital market, the banking sector, the trade deficit, the current account deficit and also to a limited extent, the fiscal deficit," he said.

Also Read: Israel-Palestine war impact on stock market, crude oil prices and gold movement

Sharma said all this would depend on the severity of the Israeli counterattack and the duration: "Does it end swiftly with a crippling blow to Hamas or it drags into a long-protracted war, e.g., Russia -Ukraine war? My sense is for a swift, bloody war and Hamas to get a debilitating blow."

The ongoing conflict in Israel is an unforeseen event and its effects may take some time to be fully absorbed, said Santosh Meena, Head of Research at Swastika Investmart.

Earlier today, Brent crude oil prices jumped over 5 per cent in a knee-jerk reaction to the conflict. Asian shares fell.

"Monitoring the situation closely, especially regarding potential involvement of other actors like Iran, is essential. The possibility of a third front involving Iran is a significant concern as it could trigger a sharp increase in crude oil prices," he said.

Tata Steel Ltd led Sensex losers, tanking 2.22 per cent to Rs 123.10. NPTC Ltd declined 1.91 per cent to Rs 231.25. State Bank of India Ltd (SBI) slipped 1.81 per cent to Rs 582.75. IndusInd Bank, Titan Company, Power Grid and Asian Paints fell up to 1.6 per cent.

Three IT stocks bucked the weak trend. HCL Technologies Ltd rose 1.12 per cent to Rs 1,250. Tata Consultancy Services rose 0.43 per cent to Rs 3,635.65 as the comapny board would consider a share buyback proposal along with quarterly results on Wednesday. Infosys edged 0.17 per cent higher to Rs 1,481 ahead of its September quarter results later this week.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said while the death and destruction seen in Hamas attack on Israel are tragic, he does not see any major disruption in oil supplies. He warned that the situation would change if oil producer Iran which is backing Hamas, is drawn into the war. Such a scenario may disrupt oil supplies and lead to spike in crude oil prices, Vijayakumar warned adding that it could trigger a risk-off in the market.

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