The impact of the conflict in West Asia could well be felt in markets across the world. Dalal Street was no exception. In India, Nifty opened gap down and remained in negative territory throughout the session. It finally ended down 0.7%, around 19500 and the Sensex shut shop at 65,512, down nearly 500 points. The market saw heightened volatility and 27 of 30 index stocks on Sensex ended lower on Monday. All sectors ended in red with major selling seen in PSU Banks, metals and consumer durables. The Adani stock cracked even as the company issued statement highlighting the concerns and employee safety at the Haifa Port.
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services said, “Concerns over rate hikes after strong US jobs data and a surge in oil prices due to war in West Asia made investors cautious. In the near-term, we expect markets to remain volatile amid geopolitical stress and inflationary pressure ahead of CPI data to be released by the US, Europe and China later during the week.”
Focus on oil and dollar
Oil in fact rose nearly 8 per cent in last two days on worries that persistently high-interest rates will slow global growth and hammer fuel demand, even if supplies are depressed by Saudi Arabia and Russia. The week ahead remains crucial as US will release its CPI data and the September labour market reported moderation in hourly wages, which should be helpful in easing the inflationary pressure. Mohammed Imran, Research Analystat Sharekhan by BNP Paribas reiterated a cautious stance, “we remain cautiously bullish on crude oil prices in the short term, supported by strong US economic data, and optimism surrounding the Chinese economy bottoming out. The US shale oil rigs have reached to 497 counts, their lowest since Feb-2022, indicative for a tight supply market ahead November is supported by $83 level, and we advise trade to buy the correction for the target of $89/bbl.”
The dollar was the other safe haven bet that saw significant traction. Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities added that, “Geopolitical tensions and rising US yields are concerning. We need to be careful now. We expect volatility to increase. We expect a range of 83.00 and 83.50 on spot.”