Kolkata: 

On June 12, benchmark indices Sensex and Nifty closed the session down 1% and 1.01% respectively. The question is, with Israel striking Iran, one of the biggest oil producing countries, will it continue to weigh down on investor sentiments as the market opens for trade on Friday, June 13? It seems likely with all the Asian market indices down in the morning including GIFT Nifty.

US-China trade deal:

The discussions on a possible US-China trade deal in London did not assuage investor concerns either. Trump wrote on social media that China will supply the US with rare-earth minerals and magnets and in return Washington will allow Chinese students into the US universities. But Xi Xingping was yet to put his approval on the proposal.

Iran is OPEC’s third largest crude oil producer. Military conflict between Israel and Iran can not only prolong the geopolitical tension in the perennial soft spot of West Asia but can easily lead to a surge in crude oil prices around the world, which, in turn, can not only lead to inflation but also can be a drag on India’s economy which is heavily dependent on import of crude (to the extent of more than 80% of the annual requirement).

Will the retail inflation hurrah be ignored?

The significance of the West Asia crisis is so high that the fact that low food prices have guided retail inflation in May to a six-year low of 2.82% could fail to cheer investors. In normal times, this economy data is expected to lift sentiments significantly in the equity markets. Food inflation decelerated to 0.99%.

Global markets:

On June 12, Dow Jones ended significantly down (1.38%) in the US, while S&P500 and Nasdaq managed to cling to the green zone by 0.38% and 0.24% respectively. In Europe only FTSE ended in the green with CAC and DAX ending lower.

On Friday morning, GIFT Nifty was down by 0.77% at 7:30 am. All the Asian indices Nikkei 225, Hang Seng, Straits Times, Shanghai Composite, Taiwan Weighted and KOSPI were trading in the red.

On Thursday, Sensex 30 closed at 81,691.98, down 823 points, while Nifty 50 settled 253 points lower at 24,888.20. BSE Midcap and Smallcap indices dropped even more — 1.52% and 1.38% respectively. The market capitalisation of BSE firms declined by about Rs 449.6 lakh crore from about Rs 455.6 lakh crore.

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