Indian shares fall as oil jumps on renewed escalation in the Middle East

Indian shares fell on Monday in a broad-based sell-off as renewed fighting in the Middle East and Iran’s claim to have closed the vital Strait of Hormuz again pushed crude oil prices higher.

The benchmark Nifty 50 fell 0.71% to 24,034.1, while the BSE Sensex lost 0.78% to 76,965.69, as of 9:32 a.m. IST.

All 16 major sectors traded lower, with financials, auto, and metal stocks dropping about 1% each.

U.S. and Iranian forces exchanged heavy missile and drone assaults, with Tehran targeting U.S. facilities in states across the Gulf on Sunday and saying it had again closed the vital Strait of Hormuz.

The renewed violence casts further doubt on the future of an interim U.S.-Iranian agreement signed last month that aimed to reopen the strait - a narrow waterway through which about 20% of the globe’s petroleum trade happens.

Brent crude futures jumped 4% to $79 per barrel, rekindling inflation worries and U.S. rate hike jitters.

“The back and forth movement in the (Middle East) crisis has become the new normal…. (However), there is no panic in the oil market like in March. So long as Brent trades below $90, the market won’t be impacted significantly,” said V.K. Vijayakumar, chief investment strategy at Geojit Investments.

India’s benchmark indexes fell 0.3% last week as renewed tensions in the Middle East outweighted better-than-expected earnings from India’s largest software exporter Tata Consultancy Services ,TCS.NS>.

The losses last week also marked an end to a four-week winning streak that was boosted by easing geopolitical tensions and crude oil prices.

Among stocks, L&T Finance rose 3.2% on Monday after the non-bank lender reported higher profit and loan growth for the quarter ended June.

Just Dial soared 13% after reporting strong first-quarter earnings growth and appointing new chief executive officer and chief financial officer.