Sensex, Nifty extend losses amid Iran-US conflict; volatility surges to 25 pc

Indian stock indices extended their bearish run with benchmark Sensex opening over 2 per cent lower at the Wednesday morning bell amidst escalating geopolitical tensions in West Asia that have invariably weighed down financial markets worldwide At the time of filing this report Sensex was 21 per cent down at 78590 points Similarly Nifty was 19 per cent down at 24390 pointsIndian share markets were closed on Tuesday on account of Holi with trading suspended on both the National Stock Exchange NSE and the BSEOn Monday Indian stock indices settled in the red but recovered substantially from the early losses amid escalating tensions in West Asia Sensex closed at 8023885 points down 104834 points or 129 per cent while Nifty closed at 2486570 points down 31295 points or 124 per centIndia VIX which indicates volatility in the markets were whopping 25 per cent up Volatility Index is a measure of the markets expectation of volatility over the near term Volatility is often described as the rate and magnitude of changes in prices and in finance often referred to as riskAccording to SBI Securities a sharp spike in crude oil prices amid escalating tensions in West Asia dampened investors sentiment on MondayAsian markets are also trading negative todayShrikant Chouhan Head Equity Research Kotak Securities said Currently the market is trading significantly below both shortterm and mediumterm averages and on daily charts it appears to be in a weak formation indicating a largely negative outlookAjay Bagga a veteran financial market expert said Indian markets will look at three impacts from the IranUS conflictThe first risk transmitter is higher oil prices due to the de facto closure of the Straits of Hormuz The second is the impact on major trading partners of India in the Gulf with Indian exporters suffering due to the closure of these shipping lanes and supply chainsThe third is the risk to the 9 million Indians who work in the Middle East What happens to their lives livelihoods remittances sent back home These three will be the major questions and we are frankly not knowing enough to estimate the answers to these for now The best outcome is that the new Iranian leadership chooses survival over ideology and returns to negotiations allows tankers to sail down the Straits of Hormuz and stop attacking GCC targets Bagga saidBagga sees some buying on dips to start as extremely oversold markets start positioning for a sentiment reversalFinancial markets turned sharply riskoff on Tuesday as mounting fears of an inflation surge rippled across stocks and bonds worldwideGlobal equities slid as disruptions to Middle East energy supplies threatened to reignite price pressures Crude oil gained around 5 per cent while European wholesale natural gas surged a punishing 40 per cent said Devarsh Vakil Head of Prime Research at HDFC SecuritiesVakil said Prolonged tensions among the United States Israel and Iran are mounting pressure on India across its current account inflation outlook and currency stability Elevated crude prices stand to raise the countrys import bill widen its current account deficit weaken the rupee stoke inflation and trigger foreign capital outflowsThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever