Indian stock indices fell sharply on Wednesday after escalation in West Asia raised fears over global energy supplies and prompted investors to exit risk assets. The BSE Sensex dropped as much as 1,150 points, or 1.54 percent, to an intraday low of 73,492.60. The initial decline erased more than 600,000 crore rupees, or about 72 billion dollars, in market value. Late buying by domestic institutions helped the index recover much of the loss and finish 303.67 points lower at 74,346.17. The Nifty 50 also declined, touching an intraday low nearly 300 points lower before closing 78 points down at 23,405.60.
The main trigger was concern over the Strait of Hormuz after the US military said it had countered Iranian drone and missile strikes in the Gulf. Defensive actions were taken against military sites on Iran’s Qeshm Island. The moves heightened worries about possible shipping disruptions, pushing Brent crude prices close to 97 dollars a barrel.
India, which imports over 80 percent of its crude, faces higher costs that could widen the current account deficit and increase inflation. The rupee weakened to 95.26 against the dollar.
The Nifty IT index fell nearly 5 percent in early trade after a brokerage report questioned growth prospects for major technology companies. Additional pressure came from US jobs data that reduced expectations for Federal Reserve rate cuts and raised the chance of a hike this year to around 40 percent. Foreign investors continued selling Indian shares.
Markets found support near 73,300 as domestic mutual funds and retail investors bought quality stocks at lower prices.
