ARTICLE AD BOX
Mumbai: India’s stock markets have reacted sharply to the escalating tensions in the Middle East with the Sensex falling 1.78% and the Nifty falling 1.68% at 3 pm on Tuesday, May 12. This comes after the US and Iran failed to accept a ceasefire deal, causing widespread panic and anxiety in the markets.
Over the past 4 trading sessions, investors have lost ₹17 lakh crore, which has seen the Sensex crash by 3,400 points. The overall market capitalization (m-cap) of BSE firms have dropped to ₹456 lakh crore on Tuesday, May 12, following the news.
The Trigger: “Ceasefire on Life Support”
A late-night statement from the Oval Office came when US President Donald Trump dismissed Iran’s 14-point peace proposal as ‘garbage’ and ‘totally unacceptable’ as the US wasn’t ready to end the naval blockade, compensate Iran for the war damages and recognize Iran’s sovereignty over the Strait of Hormuz.
Why the Indian Market is Hemorrhaging
As one of the leading oil importers, India has been highly sensitive to crude oil prices, with brent oil rising to almost $105 per barrel on May 12. If the Strait of Hormuz remains paralyzed, analysts warn that Brent could reach upwards of $115 per barrel.
Besides that, the Indian Rupee has plummeted to an all-time low of Rs.95.72 against the US Dollar, as the dual blow of high oil prices and FII (Foreign Institutional Investor) outflows has been affecting the value of the domestic currency.
What Should Investors Do?
Though there are causes of concern, Indian investors shouldn’t see these geopolitical headlines in silos, even as the current volatility is based on this. Instead, market experts suggest investors should patiently wait for further clarity on the Trump-Xi Jinping meeting scheduled for tomorrow (May 14).
English (US) ·