Sensex, Nifty plunge over 1% amid rising tensions in Middle East; India VIX surges 8%

The India VIX, often referred to as the market's fear gauge, spiked more than 8 percent, reaching 13.

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The domestic equity market took a sharp hit at the open on October 3, with both the Sensex and Nifty 50 plunging over 1 percent each, pressured by mixed global cues and rising geopolitical tensions in the Middle East

At 9.16 AM, the Sensex was down 877 points or 1 percent at 83,389 and the Nifty was down 259 points at 25,537. About 620 shares advanced, 2,024 shares declined, and 149 shares remained unchanged.

Market sentiment was shaken as the Middle East conflict intensified, with Israel launching a ground operation into Lebanon and conducting airstrikes, while Iran retaliated with a ballistic missile strike following the death of Hezbollah leader Hassan Nasrallah.

The India VIX, often referred to as the market's fear gauge, spiked more than 8 percent, reaching 13.

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"If there is a larger retaliation or further escalation in the Middle East, it could lead to heightened geopolitical tensions, which might impact equity markets globally, including India. But for now, I don't think there's much cause for immediate worry," Aishvarya Dadheech, Founder & CIO at Fident Asset Management told Moneycontrol.

Amid the Middle East conflict and SEBI's circular on changes to F&O trading, Q2 FY25 earnings would be more crucial to justify valuations in the Indian market.

Excluding metal, the remaining 12 sectoral indices traded in the red, with financial services, auto, and oil and gas stocks leading the declines.

Nifty Bank recorded its fourth consecutive session of losses, sliding nearly 1 percent as key banking stocks like ICICI Bank, HDFC Bank, and Axis Bank declined by 0.8-1.5 percent. Nifty Auto also extended its downward trend, falling over 1 percent, weighed down by Tata Motors, M&M, and Maruti Suzuki. Crude-sensitive stocks, including BPCL, HPCL, Asian Paints, and Indian Oil, tumbled 2-4 percent as Brent crude edged closer to $75 per barrel.

Also Read | It's raining IPOs this year; over Rs 12,000 crore raised in September

The weakness in the benchmarks spilled over into the broader market, with both the BSE Midcap and Smallcap indices down by 0.6 percent.

On the Nifty 50, top gainers included Tech Mahindra, NTPC, Tata Steel, ONGC, and JSW Steel, with gains of 0.2-2 percent. In contrast, Tata Motors, Wipro, Asian Paints, Eicher Motors, and BPCL were the biggest laggards, each dropping 2-3 percent.

On the technical side, Deepak Jasani, Head of Retail Research at HDFC Securities said that Nifty 50 could face resistance from the 25,956-26,011 band and find support at 25,446 in the near term.

While Japan led gains in most Asian markets, Hong Kong's Hang Seng index slipped as optimism over China's stimulus measures cooled. Mainland Chinese markets remain closed until October 8 for a national holiday, and South Korea's market was closed today for National Foundation Day.

In the US, all three major indexes edged slightly above the flatline overnight, weighed down by Middle East uncertainties. Investors are now eyeing US jobless claims data, expected today, and the non-farm payrolls report due on October 4.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.