Mumbai, April 2 The Sensex and Nifty, India's benchmark equity indices, declined by 2% in the early trading session on Thursday, amid rising geopolitical tensions following US President Donald Trump's warning of intensified military actions against Iran, which drove up crude oil prices.
Further, sustained outflows of foreign funds also contributed to the weakness in domestic equities.
The 30-share BSE Sensex fell by 1,433.72 points, or 1.96%, to close at 71,700.60. The 50-share NSE Nifty dropped by 445.70 points, or 1.97%, to 22,233.70 in the morning trading.
All the 30 Sensex-listed companies saw their stock prices decline, with Sun Pharmaceuticals, IndiGo, Adani Ports, Eternal, Larsen & Toubro, Asian Paints, NTPC, State Bank of India, Trent, Kotak Mahindra Bank, Axis Bank, and PowerGrid being among the major decliners.
"With President Trump's declaration, 'we are going to hit Iran extremely hard in the next two to three weeks,' market sentiment has turned negative again," said V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
According to exchange data, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 8,331.15 crore on Wednesday, while Domestic Institutional Investors (DIIs) bought stocks worth Rs 7,171.80 crore.
"The high crude prices, the widening trade deficit, the fear of declining remittances, and sustained selling by FPIs are collectively putting pressure on the rupee, which continues to decline despite the RBI's decisions on restrictions on dollar futures deals," Vijayakumar added.
Broader Asian markets also saw declines, with South Korea's Kospi benchmark falling by 4.31%, Japan's Nikkei 225 index declining by 2.24%, Hong Kong's Hang Seng plummeting by 1.04%, and Shanghai's SSE Composite index slipping by 0.53%.
Meanwhile, the US market ended significantly higher on Wednesday.
Brent crude, the global oil benchmark, traded 4.44% higher at USD 105.65 per barrel.
On Wednesday, the 30-share BSE Sensex jumped 1,186.77 points to close at 73,134.32. The 50-share NSE Nifty climbed 348 points to end at 22,679.40.
