Financial markets were gripped by a surging wave of apprehension as equity benchmark indices plummeted in the early hours of trading on April 19. The dismal performance represented the fifth consecutive day of losses, with deepening Middle East unrest significantly eroding investor confidence.
The markets were further beleaguered by a series of detrimental factors including continuous withdrawal of foreign funds, a notable increase in Brent crude oil prices, and a considerable downturn in IT stocks, which collectively contributed to the prevailing bearish sentiment across equity territories.
The 30-share BSE Sensex experienced a substantial drop of 672.53 points descending to a troubling 71,816.46, while the NSE Nifty witnessed a decline of 218.2 points, bottoming out at 21,777.65, reflecting a palpable sense of investor trepidation.
Leading the downturn from the Sensex pack, Infosys came under acute pressure with a decline of over 2% following the announcement that its revenue growth forecast for the fiscal year of 2025 fell short of market expectations. The technology behemoth tempered its estimations to a modest range of 1-3% in constant currency terms for the said period, alongside an operating margin prediction set between 20-22%. This forecast, relayed by JM Financial Institutional Securities, was enough to spook market participants who had anticipated a more robust performance.
The bleak trends didn’t spare other industry heavyweights; Axis Bank, HCL Technologies, Asian Paints, Larsen & Toubro, Tata Motors, Tata Consultancy Services, and Nestle India found themselves on the roster of major underperformers. Conversely, ITC and HDFC Bank emerged as the few entities managing to swim against the tide of market pessimism.
Asian market indices, too, resonated with this downturn, as trading floors in Seoul, Tokyo, Shanghai, and Hong Kong all registered negative figures, mirroring the global uncertainty. Adding to the dreary outlook, Wall Street had concluded the preceding Thursday on mostly lower notes.
The international oil segment experienced its own volatility as the global oil benchmark Brent crude recorded a 2.27% escalation, trading at USD 89.09 per barrel – an upward thrust potentially instigating additional concerns over inflationary pressures.
Foreign Institutional Investors (FIIs) seemed to have taken a cautious stance, pulling out equities to the tune of ₹4,260.33 crore on Thursday, as per exchange data, signaling a retreat from riskier assets amidst the heightened geopolitical risk.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the underlying causes of the market’s jitteriness. “Reports of the feared escalation of the Iran-Israel tensions have spooked the markets. Distinct weakness in Asian markets and sharp cuts in US futures reflect heightened nervousness in equity markets,” he elaborated, underscoring the prevailing risk-off mood.
In an interesting juxtaposition to the turbulent market scenario, the political landscape in India geared up for action with the commencement of the 2024 Lok Sabha polls. The first phase of voting began on Friday, setting the stage for a keenly watched electoral battle.
Market participants had already braced for volatility, as evidenced by the performance on Thursday, where the BSE benchmark shed 454.69 points or 0.62%, closing at 72,488.99, while the NSE Nifty retracted by 152.05 points or 0.69%, to 21,995.85.
Investors and analysts alike will be keeping a close eye on unfolding events, both in the political arena and the wider geopolitical stage, as they continue to navigate the choppy waters of the current financial markets.
