The indian stock market witnessed huge turmoil on Friday, june 13. Major indexes like Sensex and Nifty closed with a decline after a day of fluctuations. The Sensex fell 573 points to close at 81,118.60 and the Nifty fell 170 points to close at 24,718.60. Initially, both the indexes had registered a decline of about 1.7 percent, but there was some recovery by the end of the day. The BSE Midcap and Smallcap indexes also closed with a slight decline. The total valuation of the market fell by about Rs 2.4 lakh crore in a day to Rs 447.2 lakh crore.
The stock market fell due to these major reasons
1. Israel-Iran conflict
The biggest reason is believed to be Israel's attack on Iran. The Israeli air Force targeted Iran's nuclear sites, missile factories and military bases. prime minister Netanyahu called it a 'strike on the heart of Iran's nuclear program' and indicated that this operation could last for several days. This conflict has frightened global investors and its effect was clearly visible on the indian market as well.
2. Rise in crude oil prices
After the attack on Iran, there was a tremendous jump in the prices of crude oil in the international market. The prices of WTI and Brent crude increased by more than 10 percent. india, which is a major oil importing country in the world, suffers direct loss from this. Rising oil prices not only increase government expenditure but also fuel inflation.
3. Race towards safe-haven assets
Amidst geopolitical tensions, investors withdrew money from the stock market and turned to safe investments. Demand for gold, US dollar and bonds increased. gold prices in india rose by 2 percent, while the US dollar and bonds also strengthened. When investors avoid risk, a fall in the stock market becomes inevitable.
4. Rupee falls, impact on foreign investment
The indian rupee opened at 86.25 against the US dollar on Friday, which is a fall of 73 paise compared to the previous day. This is considered to be the biggest one-day fall since May 8. When the rupee weakens, imports become expensive, inflation increases and India's appeal for foreign investors decreases.
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