Indian benchmark equity indices started the week on a lower note on Monday, mirroring losses in Asian markets, as investor sentiment was subdued after Iran’s retaliatory attack on Israel over the weekend spurred fears of a wider regional conflict.

The BSE Sensex was trading 800 points or 0.86% lower at 73,468.70. Nifty50 was trading at 22,330, down 190 points or 0.84% at around 9.19 am.

Meanwhile, the market capitalisation of all listed companies on BSE declined by Rs 6 lakh crore to Rs 393.77 lakh crore.

On the sectoral front, Nifty PSU Bank, Realty, and Media opened with declines of over 2%, while Nifty Auto, Financial, Metal, Pharma, and Oil & Gas opened with losses ranging from 1-2%.

1) Middle East conflict
Iran Saturday night launched a drone missile attack on Israel. This was in response to a suspected Israeli strike on its consulate in Damascus on April 1 in which seven Iranian Revolutionary Guard Corps personnel, including two generals, were killed.

Meanwhile, Sensex and Nifty experienced sharp declines on Monday as equity investors expressed concerns about the repercussions of Iran’s unprecedented full-scale military attack on Israel.

“Everybody is cautious as the market is at an all-time high level. The Street is waiting for a reason to consolidate and geopolitical tensions could lead to a knee-jerk reaction. We need to watch closely how the tensions escalate,” Kranthi Bathini of WealthMills Securities told ETMarkets.

2) Asian Markets
Markets in Asia began the week on a cautious footing. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7% after Iran had, late on Saturday, launched explosive drones and missiles at Israel.
Japan’s Nikkei slid more than 1%, while Australia’s S&P/ASX 200 index lost 0.6%. Hong Kong’s Hang Seng Index slumped 0.8%.

3) Treasury Yields Maintain Recent Peaks
US Treasury yields held near their recent highs as traders pared back their expectations of the pace and scale of rate cuts from the Federal Reserve this year.

The benchmark 10-year yield last stood at 4.5277%, while the two-year yield held near the 5% level and was last at 4.8966%.

4) Dollar Index Rises
The Indian rupee fell 5 paise to 83.36 against the US dollar in early trade. The dollar index, which monitors the performance of the greenback against a basket of six major world currencies, was at the 105.94 level.

Meanwhile, the dollar scaled a fresh 34-year high against the yen on growing expectations that sticky inflationary pressures in the United States will keep rates there higher for longer.

5) Oil Impact
Oil prices, however, hardly reacted to the news, as traders had largely priced in a retaliatory attack from Iran that would likely further disrupt supply chains. That saw Brent crude futures peaking at $92.18 a barrel last week, the highest level since October.

Brent was last 0.5% lower at $90.01 per barrel, while U.S. West Texas Intermediate crude futures fell roughly 0.6% to $85.13 a barrel.


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