Indian shares end low as US-Iran tensions sparks oil price fear; gold gains

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.

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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.

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Oil prices up, spooking India

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.

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Gold gains as safe-haven demand rises

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.

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