Capital and commodity markets in India had a tough session on Wednesday as soaring tensions between Iran and its archfoe the United States spooked investors and drove them hunting for safe-haven assets like gold. The benchmark BSE Sensex settled 51.73 points lower (-0.13%) at 40,817.74 for the day while the broader NSE Nifty ended 0.23% (-27.60 points) lower at 12,025.35. The rupee fell 14 paise (-0.19%) to settle at 71.69 per US Dollar.
Among the top gainers on the BSE were Bharti Airtel, Tata Consultancy Services, and UltraTech Cement with shares up 3.05%, 2.2% and 1.8% respectively. On the other hand, shares of Larsen and Toubro (L&T), Oil and Natural Gas Corporation (ONCG) and Titan fell 2.19%, 1.75% and 1.43% respectively. Capital goods and petroleum shares came under heavy pressure as international crude prices soared to breach the $70 mark.
Among other news that curbed investor's risk appetite was the Centre's advanced estimates that pegged the GDP growth for 2019-20 at a dismal 5%. On Tuesday, the statistics office came out with estimate figures that showed manufacturing growth slowing to as low as 2% while private and government spending levels remain muted. The government is expected to fasten the stimulus drive in the upcoming budget to support growth.
International benchmark Brent crude climbed more than 4% immediately after news of the Iranian missile attack, reaching a session high of $71.75 per barrel — highest since September. However, it receded to trade at $68.78, higher by 0.75% as fears of escalation eased on building global pressure on the US and Iran to cool tensions. Oil prices are a barometer of world markets and any conflict in the oil-exporting Gulf region can jump prices up. India, already undergoing a messy slowdown, cannot afford a higher import bill and that's what made investors cautious.
In a volatile trading day, investors flocked to safe-haven assets such as gold with prices climbing as high as Rs 485 to Rs 41,810 per 10 gram. A weaker rupee also contributed to the rise as a stronger Dollar makes the bullion more expensive. Similarly, silver jumped by Rs 855 to Rs 49,530 per kg.