Indian markets plunge 573 points amid global tensions, oil prices surge and rupee fall

Sensex crashes 573 pts as Israel-Iran conflict, crude spike & rupee depreciation trigger investor panic, wiping ₹2.4L cr from market cap. Read

New Delhi: The Indian stock market witnessed a lot of volatility on Friday, June 13. After a day of fluctuations, the major indexes Sensex and Nifty closed with a decline. Sensex plummets by 573 points to close at 81,118.60 and Nifty plummets by 170 points to close at 24,718.60, reports Dynamite News correspondent.

In early trade, both the indices fell by about 1.7%, although there was a slight recovery by the end of the day. Due to this one-day decline, the total market cap of the stock market fell by about Rs 2.4 lakh crore to Rs 447.2 lakh crore.

Reasons for the decline

1. Rupee depreciation and foreign investment affected

On Friday, the rupee started at 86.25 against the US dollar, which was 73 paise lower than the opening on the previous day. This has been the largest one-day drop of the rupee since May 8. The weakness of the rupee makes imports expensive, increases inflation, and reduces India's attractiveness for foreign investors.

2. Inclination towards safe investments

Due to geopolitical tensions, investors withdrew money from the equity market and turned to safe options. Demand for gold, dollars, and government bonds increased. Gold prices in India rose by 2%, while the dollar and US bonds strengthened. When investors shun risk, the stock market is certain to decline.

3. Doubts on US-China trade deal

Although US President Donald Trump claimed that a trade deal had been reached between the US and China, the market expected more than this. Due to a lack of clarity in the terms of the agreement, uncertainty remained in the market, which negatively affected the investment sentiment.

4. Huge increase in crude oil prices

Crude oil prices jumped after the attack on Iran. WTI and Brent crude prices increased over 10%. For a large oil-importing country like India, this situation proves to be expensive because it not only increases the import cost but also affects inflation.

5. Israel-Iran conflict

The biggest reason for the decline in the stock market is believed to be the military attack by Israel on Iran. The Israeli Air Force attacked Iran's nuclear facility, missile manufacturing units, and military bases. Prime Minister Netanyahu called it an 'attack on the center of Iran's nuclear program' and clarified that this operation could last for several days.

This tension spread panic among global investors, which also affected the Indian market. Stay tuned to Dynamite News for further updates.