Mumbai, June 14 The Indian equity markets witnessed heightened volatility this week, ultimately closing in the red, analysts said on Saturday, adding that early optimism, driven by progress in US–China trade negotiations, was overshadowed by escalating geopolitical tensions after Israel launched a strike on Iran’s nuclear facilities.
This development sparked a global risk-off sentiment, leading to a rally in safe-haven assets such as gold and U.S. bonds. Oil prices surged past $76/barrel after months of consolidation, as fears of supply disruptions resurfaced.
“On the domestic front, CPI inflation eased to a 75-month low, offering some relief. However, the recent spike in crude prices could reverse this trend if the Middle East conflict intensifies. Sectorally, rate-sensitive segments like auto, realty, and banking saw profit booking, while export-oriented sectors such as IT and pharma gained amid a weaker rupee,” said Vinod Nair, Head of Research, Geojit Investments Ltd.
The market witnessed a broad-based sell-off, with all key sectoral indices ending in negative territory, while India VIX spiked over 7 percent, reflecting heightened volatility and investor anxiety.
The Nifty 50 opened sharply lower, hitting an intraday trough of 24,473 in early trade before staging a partial recovery. However, the index still ended the session lower by 169.60 points, or 0.68%, at 24,718.60.
On the sectoral front, the Nifty PSU Bank index underperformed, shedding 1.18 percent, followed by losses in the Nifty Metal and Nifty Bank indices, which declined 0.96 percent and 1.17 percent, respectively.
“The broader market also remained under pressure, with the Nifty Midcap 100 and Smallcap 100 indices slipping 0.4 percent and 0.5 percent, respectively. In contrast, defence stocks saw sharp buying interest amid escalating hostilities between Israel and Iran, as investors anticipated increased order flows and spending in the defence sector, driven by rising geopolitical risk and global security concerns,” said a note by Bajaj Broking Research.
Given the prevailing scenario, traders should maintain a balanced approach with positions on both sides, focusing on stock selection driven by sectoral and thematic trends. It is advisable to avoid aggressive bets and manage risk prudently, said Ajit Mishra – SVP, Research, Religare Broking Ltd.
Looking ahead, investors are expected to remain cautious amid premium valuations and geopolitical risks.
All eyes are now on the upcoming US Fed meeting, where interest rates are likely to remain unchanged. However, the Fed’s commentary and economic projections will be closely scrutinised for future policy cues, said market watchers.
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