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Sensex dives as oil prices surge; Nifty falls most in 4 months

By Reuters

  • 06 Jan 2020
Sensex dives as oil prices surge; Nifty falls most in 4 months
Credit: Reuters

Indian shares fell on Monday as escalating US-Iran tensions spiked crude, pulling the rupee lower and stoking fears of a higher import bill for the world's third biggest oil consumer.

The NSE Nifty 50 index fell just over 2%, recording its worst intraday fall since September 3 and hitting its lowest in nearly four weeks.

The Nifty 50 ended 1.91% lower at 11,993.05, while the benchmark S&P BSE Sensex closed down 1.9% at 40,676.63. The rupee was 0.3% weaker at 72.03 against the dollar.

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Oil prices rose a further 2% on Monday, extending Friday's gains, as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after U.S. air strikes killed a top Iranian general.

The escalating Middle East conflict is causing concerns of disruptions to oil supplies in a region that accounts for nearly half of the world's total production.

Rising crude prices could widen India's current account deficit and fiscal deficit as Asia's third-biggest economy spends more on oil imports, said Rusmik Oza, head of fundamental research at Kotak Securities Ltd in Mumbai.

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"The geopolitical tension has increased the risk of unknowns, which is getting factored into the market," he said.

The Nifty PSU bank index, which tracks state-run banks, fell 4.34%, with top lender State Bank of India down 4.41% at its worst closing level in nearly four weeks.

Non-banking finance firm Bajaj Finance Ltd closed down 4.7% and was the biggest loser on the Nifty 50.

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However, Titan Company Ltd was a bright spot among Indian equities, closing up 1.7%, after reporting jewellery division sales that met the company's revised expectations on the back of the wedding season.

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