Indian stocks recover from heavy losses as Israel-Iran conflict continues; Sensex closes 511 points down

New Delhi [India], June 23 (ANI): Indian stock market declined on Monday as did most other Asian indices, amid geopolitical tensions stemming from an escalation in the Israel-Iran conflict.
Sensex closed at 81,896.79 points, down 511.38 points, or 0.62 per cent, while Nifty closed at 24,971.90 points or 140.50 points or 0.56 per cent. At one point, Sensex was about 1,000 points down but recovered later.
Among the sectoral indices, Nifty auto, FMCG, IT slumped sharply, while Nifty consumer durables, metal, media soared, NSE data showed.
Markets remain volatile as missile attacks continue, and oil remains jittery with a sizable portion of supply routes under threat.
International crude oil prices have shot over the few days, reacting to the fresh geopolitical tensions.
Over the years, India has diversified its energy supplies, and a large volume of these do not come through the Strait of Hormuz now.
Oil Marketing Companies have supplies for several weeks and continue to receive energy supplies from several routes. Petroleum Minister Hardeep Puri vowed his ministry will take all necessary steps to ensure the stability of fuel supplies.
Riya Singh - Research Analyst, Commodities and Currency, Emkay Global Financial Services, said: "Crude oil prices saw a sharp spike following US airstrikes on Iran's nuclear facilities at Fordow, Natanz, and Isfahan, with Brent crude briefly surging 5.7 per cent to USD 81.40 a barrel amid fears of a broader conflict, before retreating to around USD 78 as physical oil flows remained undisturbed."
"The initial rally reflected heightened anxiety over potential supply disruptions, particularly through the Strait of Hormuz, an artery for nearly 20-25 per cent of global crude and LNG flows, but with the passage still open and no immediate Iranian retaliation, markets trimmed risk premiums."
Manoranjan Sharma, Chief Economist, Infomerics Ratings, said: "Iran has threatened to close the Strait of Hormuz. This will have severe implications for India, because, as most of us are aware, that 20 per cent of world's oil passes through this narrow route, and 60 per cent of the oil which we consume in India passes through this route. So this will have very severe implications for India. Apart from this, any uptick in oil will have bad implications, both for economic growth and the inflationary spiral."
"We have done some exercise in this area, and we find that every USD 10 increase in the price of oil reduces India's GDP growth by about 0.3 per cent and pushes up inflation by 0.4 per cent. This will also have a bad influence on the value of rupee, which can fall further from the present level of roughly around 85 rupees to the US dollar," Sharma added.
However, Nirav Vakharia, a market expert, said that even if Iran decides to close the Strait of Hormuz, it will not have much impact on India.
"If Iran decides to close the Strait of Hormuz, it will not have much impact on India as India imports very minimum from Iran...India has multiple resources of oil supply including UAE, Qatar, Russia, the US," Vakharia added. (ANI)