Indian markets witness sharp fall amid Iran-Israel conflict

Indian equity benchmarks witnessed massive selling pressure and settled near day’s low points on Thursday amid an escalation of war between Israel and Iran and after markets regulator SEBI tightened the norms for futures and options (F&O) to curb speculative trading. Key gauges made a gap-down opening and continued to drift lower to close deep in the red, as the foreign institutional investors (FIIs) extended their selling as they sold equities worth Rs 5,579 crore on October 1. Traders were anxious as Goods and services tax (GST) revenue growth rate declined to 6.5 per cent in September at Rs 1.73 lakh crore as the rise in collections from domestic transactions as well as imports slowed. In August 2024, the mop-up was Rs 1.75 lakh crore.

In the second half of the session, bears were seen tightening their grip on Dalal Street with both indices ending with losses of over two percent each, amid selling across the sectors. Sentiments remained down-beat with a labour ministry statement stating that retail inflation for industrial workers inched up marginally to 2.44 per cent in August against 2.15 per cent in July this year. The All-India CPI-IW (Consumer Price Index-Industrial Workers) for August 2024 decreased by 0.1 points and stood at 142.6 points. Traders overlooked the data made available by state-run weather bureau India Meteorological Department showing that  southwest monsoon rains in India hit four years high this season, experiencing about 108 per cent of the long period average at 934.8 mm. A rainfall of 868.6 mm is the long period average in India. Above-normal monsoon rains helped farmers sow more crops this Kharif season and it bodes well for the overall agriculture sector, which is the mainstay source of livelihoods for millions of Indians. 

On the global front, European markets were trading mostly in red after a survey showed the euro area private sector shrank for the first time in seven months in September. The final HCOB composite output index fell to 49.6 in September from a three-month high of 51.0 in August - bolstering expectations for an interest rate cut at the European Central Bank's meeting on October 17. Asian markets settled mixed on Thursday as fears of a full-fledged war between Iran and Israel dented investors' appetite for riskier assets. The escalating tensions fueled a significant rise in crude oil prices, heightening fear among market participants. 

Finally, the BSE Sensex fell 1769.19 points or 2.10% to 82,497.10, and the CNX Nifty was down by 546.80 points or 2.12% to 25,250.10.      

The BSE Sensex touched high and low of 83,752.81 and 82,434.02 respectively. There was 1 stock advancing against 29 stocks declining on the index. 

The broader indices ended in red; the BSE Mid cap index fell 2.27%, while Small cap index was down by 1.84%.

The top losing sectoral indices on the BSE were Realty down by 4.49%, Capital Goods down by 3.18%, Auto down by 2.94%, Industrials down by 2.75% and Oil & Gas down by 2.52%, while there were no gaining sectoral indices on the BSE. 

The lone gainer on the Sensex was JSW Steel up by 1.18%. On the flip side, Larsen & Toubro down by 4.18%, Axis Bank down by 4.12%, Tata Motors down by 4.08%, Reliance Industries down by 3.91% and Maruti Suzuki down by 3.90% were the top losers. 

Meanwhile, gross goods and services tax (GST) collection rose by 6.5 per cent in September 2024 at Rs 1.73 lakh crore as compared to the mop-up of Rs 1.63 lakh crore in September last year. However, this growth is slowest in collections in 40-months. Also, September 2024 collection declined marginally by 1.14 per cent as compared to at Rs 1.75 lakh crore GST revenues in August 2024. 

According to government data, gross domestic revenue grew 5.9 per cent to about Rs 1.27 lakh crore. Revenue from import of goods was up 8 per cent to Rs 45,390 crore. Refunds worth Rs 20,458 crore were issued during the month, an increase of 31 per cent over the year-ago period. 

After adjusting refunds, the net GST revenue in September stood at Rs 1.53 lakh crore, 3.9 per cent higher than the year-ago period. GST collections during the April-September period of the current fiscal year grew 9.5 per cent to over Rs 10.87 lakh crore.

The CNX Nifty traded in a range of 25,639.45 and 25,230.30. There were 2 stocks advancing against 48 stocks declining on the index.

The few gainers on Nifty were JSW Steel up by 1.33% and ONGC up by 0.36%. On the flip side, BPCL down by 5.00%, Shriram Finance down by 4.42%, Larsen & Toubro down by 4.05%, Axis Bank down by 3.97% and Reliance Industries down by 3.95% were the top losers.

European markets were trading mostly in red; France’s CAC fell 55.32 points or 0.73% to 7,522.27 and Germany’s DAX lost 96.32 points or 0.5% to 19,068.43, while UK’s FTSE 100 increased 25.12 points or 0.3% to 8,315.98.

Asian markets settled mixed on Thursday due to signs of escalating geopolitical tensions in the Middle East following the conflict between Iran and Israel. Meanwhile, robustness in the US jobs market reinforced expectations that the US central bank will not rush to cut interest rates. Mainland Chinese markets and South Korean markets were closed for the National Day holiday, while Taiwan market was shut down for Typhoon Krathon. Japanese shares gained after Japanese Prime Minister Shigeru Ishiba said the country is not in an environment for further rate hikes, while the yen extended its drop. Hong Kong shares dropped as real estate and technology shares led the falls.