The Indian stock market closed in the green on Wednesday, with Sensex and Nifty recording marginal gains after wiping off most of their intraday losses.
Sensex rose over 130 points to close at 77,185, while Nifty 50 gained over 26 points to end the session at 24,078 on Wednesday. This came while the volatility measure, India VIX, dropped over 3% to 13.27.
While the benchmark indices have closed in the green, Sensex dropped 461 points from its intraday high of 77,185, and Nifty wiped off most of its gains after rising as high as 24,220 earlier during the session.
Eternal, UltraTech Cement, SBI, Bajaj Finance, Tech Mahindra, IndiGo and Asian Paints shares were the top gainers on Sensex, rising 1-3%. Bucking the trend, Power Grid, L&T, Tata Steel, Infosys and NTPC shares dropped 1-2%.
Iran-US conflict escalates
The conflict between Iran and the US continued to escalate in the Middle East. Iran's Islamic Revolutionary Guard Corps has threatened to close "all other export corridors that benefit the U.S. and its allies", Iranian media reported, after Iran shut the Strait of Hormuz and the U.S. reimposed a naval blockade of Iranian ports.
"Regional energy exports are either shared by all, or denied to all," the IRGC said in a statement. The hostilities between Iran and the U.S. re-ignited last week, fraying an already fragile truce reached in June after several months of fighting that has killed thousands.
US President Donald Trump threatened to hit Iranian power plants and bridges next week unless Tehran resumes negotiations. "I'll save the energy targets for last, but ultimately we'll hit energy targets," Trump said in an interview with Fox News.
Oil prices jumped as a result of the escalating conflict in the Middle East. Brent crude futures rose to $85 per barrel, while WTI Crude futures rose to nearly $80 per barrel on Wednesday.
What lies ahead?
Despite the renewed optimism, some caution is warranted. With the uncertainties in West Asia continuing and Brent crude trading around $86, there are no positives that can lift the market higher in the near-term, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
US President Donald Trump’s notoriously irresponsible comments also continue, this time about a charge on countries for US assistance to ships transiting through the Strait of Hormuz, he noted, adding that Trump soon made a U turn on this, replacing the proposed charge with ‘investments in the US’. With this kind of leadership, total uncertainty has become the new normal, rendering investment decisions extremely challenging, he added.
“In India, there are other challenges like rising CPI inflation (4.38% in June) and deficiency in monsoon which has reached 18%. On the positive side, credit growth in the economy continues to be strong and demand in sectors like automobiles continues to be robust,” Vijayakumar pointed out.
The best strategy during totally uncertain and complex times like these is to remain invested and continue to invest in stocks in growth sectors which are fairly valued, according to the analyst, who said Q1 results of leading banks, NBFCs and auto stocks will be good. Digital platform companies are likely to report good growth numbers, he added.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
