Sensex, Nifty Prediction For June 24: How Shut Down Of Strait of Hormuz Could Impact Indian Stock Market?

Indian stock market crashed after Iran threatened to close the Strait of Hormuz, an oil corridor that records a third of the world's natural gas and oil trade. Around 20 mbd of oil is supplied through this strait, of which 80% is consumed in Asia including India. Over the years, the Indian stock market has shown impressive resilience to geopolitical tensions both in the neighborhood and globally. However, the closure of the Strait of Hormuz raises new concerns over international trade.

Sensex, Nifty:

Sensex crashed to hit an intraday low of 81,476.76 on June 23, after the US struck major nuclear sites in Iran, which led to the Islamic regime's parliament voting in favour of closing Hormuz. After market hours, Sensex closed at 81,896.79, down by 511.38 points or 0.62%. On the benchmark, the new entrants Trent and BEL were top performers with 3-4% gains. The movement was seen in specific stocks due to the BSE rejig that came into effect on June 23. IT stocks were top bears with Infosys, HCL Tech and TCS down by 1% to 2.5%.

Meanwhile, bears toppled the Nifty 50 to hit an intraday low of 24,824.85 before ending at 24,971.90 which was down by 140.50 points or 0.56%. Indices like Nifty Auto, Nifty FMCG, and Nifty IT were top draggers with the decline of 1% to 1.5%. IT stocks were under pressure after Accenture's new bookings declined for second consecutive quarter.

Additionally, the FIIs and FPIs emerged as net sellers, further contributing to the downside. On Monday, FIIs/FPIs sold up to Rs 1,874.38 crore worth of Indian equities, but DIIs overpowered the FII selling trend with an inflow of a whopping Rs 5,591.77 crore.

Explaining the performance, Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services said, "Market participants remained cautious amid spike in crude oil prices due to concerns over potential supply disruptions from the Strait of Hormuz. However, selective buying by investors supported broader market outperformance with Nifty Midcap100 and Nifty Smallcap100 gaining 0.4% and 0.8% respectively. The defence sector saw strong traction, particularly in shipbuilding stocks, pushing the Nifty India Defence index up 2.3%. Shares of small finance banks (SFBs) rallied after RBI eased the lending norms by reducing the mandatory priority sector lending requirement from 75% to 60% of total loans."

He added, in contrast, Nifty IT declined over 1%, weighed by concerns over sustained softness in global tech spending-especially after Accenture revealed its third straight YoY drop in outsourcing contracts. Crude-sensitive stocks would continue to remain in focus amid a surge in Brent crude prices which rose nearly 2% to hit a five-month high level on Monday, as Iran Parliament reportedly approved the closure of the Strait of Hormuz.

How Will Strait Of Hormuz Closing Impact Indian Market?

"Indian markets have shown impressive resilience in recent months, supported by strong domestic macro fundamentals, moderating inflation, and healthy institutional flows. However, fresh geopolitical uncertainties surrounding the potential closure of the Strait of Hormuz have raised new concerns for global trade and oil-dependent economies like India," said Rohit Sarin, Rohit Sarin Co-Founder Client Associates.

Furthermore, Sarin said, a potential closure or even a credible threat to the Strait of Hormuz through which India sources nearly 85% of its crude oil could sharply drive-up oil prices, impacting India's economy. However, a potential Strait of Hormuz crisis poses downside risks, a sharp oil price spike could raise inflation, strain growth, and widen the current account deficit. While domestic inflows may remain supportive, foreign investor sentiment could weaken, and high equity valuations particularly in mid-caps may face correction pressures.

On sector-wise, Sarin added, "Sectors heavily dependent on crude, such as transportation, manufacturing, and chemicals, may face margin pressures, leading to market volatility and corrections, particularly in sensitive equity segments. At the same time, heightened geopolitical risks could boost investor interest in defence-related stocks, prompting sectoral shifts."

This oil corridor named 'Strait of Hormuz', is basically a strait between the Persian Gulf and the Gulf of Oman, is one of the world's largest and most strategic chokepoints. The strait is between three Middle East countries and is about 167 KM long with width varying from 96 Km to 39km. To the north of the strait is Iran, and to the south is the Musandam peninsula which is shared by the United Arab Emirates and an exclave of Oman called Musandam Governorate.

Strait of Hormuz is pivotal for international trade, as about 25% of the world's total oil consumption and a third of its liquefied natural gas passes through this corridor.

However, US President Donald Trump has announced that Iran and Israel have agreed for ceasefire, in the late hours of June 23. How this new development will unfold and the decision of Hormuz's closure will be keenly watched.

Stock Market Outlook On June 23:

Overall, Khemka said, "Indian Equities are expected to remain in consolidation mode, with investors closely tracking development on the global geopolitical front. While we anticipate momentum to continue in defence and upstream oil companies, banking and financial stocks are likely to be in favour on account of RBI policy support and liquidity boosting measures."

While markets remain cautious due to geopolitical risks, Satish Chandra Aluri, Lemonn Markets Desk said, "India's domestic growth fundamentals-especially in manufacturing and exports-remain resilient. Investors may stay risk-averse in the near term, but improving macro data and easing inflation could provide a buffer and re-anchor focus on earnings and rate cut expectations ahead."

According to Ajit Mishra - SVP, Research, Religare Broking, "this has been a recurring trend for the past five weeks, where the Nifty shows a decisive move on the last trading day of the week but fails to sustain it as the new week begins, remaining stuck within the broader range of 24,400-25,200. Looking ahead, in the absence of any major domestic triggers, global market performance and crude oil price movement will be key in setting the tone. Participants are advised to avoid aggressive bets and instead focus on selective stock picking based on relative strength during this consolidation phase."

Apart from this, the IPO market will be busy with three new IPOs opening on mainboard during June 24th session. These are Globe Civil Projects Limited, Ellenbarrie Industrial Gases Limited, and Kalpataru Limited.

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