Donald Trump’s war left a $42.8 billion hole in India's stock market

• BSE Sensex closed 787 points lower as the price of crude oil futures breached the $70 per barrel mark
  
• All of its sectoral indices from consumer goods to auto to healthcare slipped massively, while as many as 416 points were shaved off the banking index.
  
• The Nifty too lost 233 points with SBI Insurance, Bajaj Finance, Vedanta and Zee and Yes Bank as the top losers.
  

Donald Trump’s war on Iran is bleeding stock exchanges worldwide and India is no exception. BSE Sensex closed 787 points lower as the price of Brent crude breached the $70 per barrel mark, for the first time in nine months.

That has translated into a ₹3 lakh crore or $42.8 billion loss to Indian investors.

SBI was the top loser in the Sensex pack. During the mid-day, Sensex dipped by 870 points only to recover towards the end of the day. All of its sectoral indices from consumer goods to auto to healthcare slipped massively, while as many as 416 points were shaved off the banking index.

The Nifty too lost 233 points with SBI Insurance, Bajaj Finance, Vedanta and Zee and Yes Bank as the top losers.

"Indian market is reacting more negatively than other emerging markets due to crude oil impact. Since our dependence on crude imports as a percentage of consumption is the highest, the impact on economy and markets is also higher. Along with crude, the negative impact of currency is also weighing on Indian markets," said Rusmik Oza, Sr. VP (Head of Fundamental Research-PCG), Kotak Securities.

The rupee depreciated 24 paise against the US dollar to 72.04 during intra-day trade.

The Trump Tension

Going by Trump’s comments, tensions will continue to prevail as he threatened to impose sanctions on Iran. On the other hand, Iran too put a $80 million bounty for its countrymen who are successful in taking Trump’s life, as per an IANS report.

All the talk of war is spiking crude oil which went up by 2% in today’s trade. For a net importer like India, it is bad news. Considering that Indian economy itself is in doldrums with increasing fiscal deficit, it will weigh in badly. Rising prices of petrol and diesel will do nothing to cheer up consumers who are already in the throes of food inflation. And, consumer confidence index is at a six year low.

A report by Capital Economics said that the bill for oil imports might come in at $12 billion a month, even after the increase – and would account to around 5% of its GDP.

“This is far lower than what was in 2012 and 2013 when annual oil imports reached 8% of GDP and pushed into a balance of payments crisis,” the report said. But looks like the exchanges are in no mood to be humoured.

And, not just in India. Stock exchanges across Hong Kong, Tokyo and Seoul traded in the red. The Shanghai stock exchange however was an exception.

With inputs from PTI and IANS.

See also:
Brent has hit $70 a barrel ⁠— India can manage the risks even if it hits $75 by year end, says a research report

Donald Trump’s attack on Iran may cancel out trade war's impact on oil prices