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Oil Surge Sparks Market Plunge
24 Jul
Summary
- Benchmark indices Sensex and Nifty opened lower amid rising oil prices.
- Geopolitical tensions in West Asia and a surge in oil prices rattled markets.
- Global markets including Asian and US stocks also experienced sharp declines.
Benchmark equity indices Sensex and Nifty 50 commenced Friday's trading session with a notable gap down. This decline was primarily triggered by a resurgence in oil prices, which crossed the $100 a barrel mark due to intensifying geopolitical conflict in West Asia. The escalating tensions have not only rattled bond markets but also reignited concerns about a potential fresh inflation shock.
Analysts observed continued high volatility and uncertainty in the markets, with no immediate signs of abatement. The attack on Saudi tankers in the Red Sea by Iran-backed Houthis was identified as a key driver for the sharp spike in oil prices. This also impacted the Indian rupee, which weakened, causing foreign portfolio investors (FPIs) to shift back to selling mode.
Globally, Asian shares also fell as fresh West Asia tensions created market jitters. Major US stock benchmarks experienced sharp declines, with technology shares leading the downturn. The rise in the US 10-year Treasury yield to its highest level in over a year further compounded negative sentiment for equity markets worldwide.
