The headline indices Sensex and Nifty plunged on Monday after a drone attack on Saudi Arabia's largest oil processing facility led to soaring crude oil prices, triggering a panic sell-off.
The headline indices Sensex and Nifty plunged on Monday after a drone attack on Saudi Arabia’s largest oil processing facility led to soaring crude oil prices, triggering a panic sell-off. The 30-share Sensex plunged more than 262 points to 37,123, while the Nifty closed near the crucial 11,000-mark. OMCs including BPCL, RIL, IOC emerged among the top Nifty losers, shedding up to 8%. Nifty settled 79.80 points, or 0.72 per cent, down at 10,996.10. Global oil prices surged to fresh record high levels after the strike impacted about 5% of global supplies, an attack the US has blamed on Iran.
The attack has effectively knocked out over half of Saudi Arabia’s production as it cut 5.7 million barrels per day or over 5% of the world’s supply, according to a PTI report. Brent crude gained as much as 19.5 per cent to USD 71.95 per barrel – the biggest gain in dollar terms since futures started trading in 1988. Taking stock of the development, Ajit Mishra Vice President, Research, Religare Broking said that the sharp surge in crude oil prices has definitely impacted sentiments as it has an adverse impact on Indian economy.
“Going forward, investors would keep a close watch on geo-political developments as any further escalation could take oil prices even higher and it would be detrimental for Indian markets and economy,” he added. Investors would also keenly monitor the FOMC meet (17-18th September and the GST council meet back home on September 20. The markets failed to cheer after FM Nirmala Sitharaman had provided a boost of over Rs 70,000 crore of measures for exporters and the real estate sector over the weekend in a bid to provide a fillip amid the ongoing economic slowdown.
According to Shrikant Chouhan, Senior Vice-President, Equity Technical Research, Kotak Securities the structure of the market is again turning defensive ahead of the meeting of Federal Reserve and Bank of England. “Technically, Nifty should close above 11085 to rally further, till then it would remain range bound between 11085 and 10930. Below 10930, Nifty would gradually fall to 10830 levels,” he said. Meanwhile, the domestic currency rupee depreciated 61 paise to 71.53 against US dollar.